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The Prop 7 funds are already being claimed

Get ready for a lot more road construction in the near future.

Voters have a little more than a week to decide whether to give Texas highways a $2.75 billion annual funding boost, but Houston-area officials are already making plans to spend the money.

In the event Proposition 7 passes – the proposal has silent, token opposition – officials with the Houston-Galveston Area Council on Friday approved a revised 10-year spending plan that reflects when area road projects could begin, using the new money.

“Readiness will be the name of the game,” said David Wurdlow, program manager for short-range transportation planning at H-GAC. “We are going to be real aggressive to move projects forward.”

Without Proposition 7 the amount of money available for regional transportation projects is roughly $2.1 billion for the next decade, according to the current 10-year plan. Though not the only source of highway money, the funds directed by H-GAC’s Transportation Policy Council are among the most significant to build or rebuild highways.

Adding Proposition 7, officials estimate, increases that total to more than $4.6 billion, taking long-sought projects and moving them much closer to reality much sooner. In fiscal year 2018, for example, Proposition 7 would increase highway spending in the Houston area from $211 million to $696 million.

In 2018 alone, Proposition 7 means an earlier start to two segments of widening Interstate 45 near NASA Bypass 1 in Webster and earlier construction on FM 2100 east of Atascocita.

Another project accelerated by planners is a long-sought widening of Texas 36. Though the road isn’t a major commuting bottleneck, widening it is a major focus Freeport and Waller County officials who contend the highway is a natural truck bypass for the Houston area.

[…]

Like Proposition 1, the money comes with some conditions. Officials cannot pay off any of Texas’ highway debt, which is how many previous transportation programs were paid. All of the funds must be used on state highways – meaning no tollways, transit or alternative modes such as bicycling can benefit.

Some non-highway projects, however, could benefit, if regional officials approve. The transportation council is made up of local elected leaders and the heads of transportation agencies such as the Metropolitan Transit Authority and TxDOT’s Beaumont and Houston offices. Council members use a formula that divides the federal and state funds spent by the agency, which caps spending on non-highway projects, called alternative modes, to between 18 percent and 25 percent of total funds.

If the Proposition 7 windfall gives officials hundreds of millions of dollars more for highways, they could restructure.

“We might be able to move those (highway projects) to the proposition side and move some of those funds to alternative modes,” Wurdlow said.

Prop 7 isn’t raising any new money to spend on transportation, because we don’t do that sort of thing in Texas. It simply mandates that $2.5 billion of sales and use tax revenues in Texas specifically to transportation – in other words, it takes money from one pocket of the budget and puts it in the other. If you’re wondering why legislators who have been writing the state’s budget over the pasty few years were unable to allocate extra funds for transportation on their own, or thinking that this is just another band-aid that doesn’t actually solve anything, you would not be alone. Streetsblog and the Rivard Report present a more comprehensive case against Prop 7, but I doubt it will have much effect. Like it or not, we’re going to see a lot more highway construction in the near future. Better get used to it.

Revisiting the Texas-Amazon sales tax deal

The Statesman looks back and concludes it was a pretty good deal all around.

Amazon

In 2012, the state rolled the dice on a controversial deal with e-commerce giant Amazon.com.

To end a two-year battle, Texas said it would drop a $269 million sales tax bill due from the Seattle-based company in exchange for an incentive deal, among other agreements.

Amazon said it would begin collecting sales taxes within 60 days and create 2,500 jobs in Texas and invest $200 million in the state by 2014.

Now, as the company says it’s exceeded those benchmarks, state officials and economists say the agreement was the right call for Texas.

“I believe Texas benefited from the deal with Amazon. The agreement meant Amazon began collecting and remitting taxes to the state, which the comptroller’s office felt were legally due,” Texas Comptroller Glenn Hegar told the American-Statesman. “The agreement also allowed Amazon to start building warehouses and to greatly expand their physical presence in the state, which was largely beneficial to the economy.”

This summer, the Internet retailer told state officials it reached more than 3,500 employees in Texas and made more than $300 million in capital investment in Texas by the end of 2014, according to documents filed with the comptroller’s office.

Amazon also paid an undisclosed amount to settle the matter in 2012.

With the deal, Texas ended a two-year fight seeking the company’s uncollected sales taxes, and Amazon began collecting on July 1, 2012 — potentially adding millions of dollars in new revenue to state coffers in coming years. Now, current figures seem to prove that out.

An American-Statesman analysis of data from the comptroller’s office shows the state’s sales tax collections have risen by hundreds of millions of dollars since Amazon.com began issuing the levy on Texas residents.

Since July 2012, sales tax revenue in Amazon’s sector has gone up more than $325 million, comptroller data shows. While state law prohibits the comptroller’s office from releasing sales tax collections by individual companies, it’s clear a significant portion of that increase is a result of Amazon’s Texas sales.

Although Hegar wasn’t the comptroller at the time of the 2012 deal, he says the state has benefited from Amazon’s presence.

“We welcome and appreciate Amazon like we do all the retailers in our state,” Hegar said in weighing the company’s role in Texas today. “We encourage and benefit from the economic activity generated by both their physical activities in the state through capital investment and job creation, and also greatly appreciate their following the law by collecting and remitting taxes from our citizens when selling taxable items.”

See here, here, and here for some background. I supported this deal back then, and I’m glad to see it has basically worked as intended. The rationale from two decades ago for making online sales tax-free has long since been rendered irrelevant, and the effect of that policy has become increasingly expensive for state and local governments. It just made sense for Amazon and other online retailers to start charging sales taxes. A few years later, this isn’t even controversial any more. Like I said, a good outcome and I’m glad to see it.

BP settlement cash

Nice.

BagOfMoney

The city of Houston, Harris County and Metro netted $23 million in compensation from BP for revenue they could not collect in the wake of the company’s 2010 Gulf oil spill, officials announced Thursday.

Houston will pocket about $12.2 million from the costliest environmental lawsuit in U.S. history to cover hotel and sales tax shortfalls. The Metropolitan Transit Authority will receive more than $9.2 million for lost sales tax revenue, and Harris County will get $2.1 million for lost hotel occupancy tax revenues, officials announced in a joint statement.

However, expenses for the case and fees for two outside lawyers who represented the city, county and Metro will carve off nearly 40 percent of those totals.

Nearby communities and government entities, including the city of Galveston, Jefferson County, the city of Beaumont, and Orange Port Authority also are among the 511 entities that said the spill caused an economic shortfall.

The payouts are part of the $18.7 billion that BP agreed to pay earlier this month for damages and penalties resulting from the Deepwater Horizon spill – the worst environmental disaster in U.S. history.

[…]

Houston Mayor Annise Parker and Harris County Commissioners Steve Radack and Jack Morman said they were satisfied with the settlement. Commissioners Court has not yet determined how the county will split the money.

“Frankly, I wish we would have gotten more, but certainly it was a worthwhile lawsuit,” Radack said.

Several commissioners received a total of 1,700 identical emails from BP employees, via a server in United Arab Emirates, urging them not to pursue legal action against the company, according to Soard at the County Attorney’s office.

County Judge Ed Emmett, who voted in Commissioners Court against seeking damages, said, “I thought it was a stretch to say that we lost so much revenue because people didn’t rent hotel rooms here because of the BP spill.”

“Am I glad the county won? Sure. Would we have been part of the lawsuit if it had been just up to me? Probably not.”

He said he was disappointed the county would only to realize $1.3 million after the lawyers took their cut. Commissioner R. Jack Cagle had also voted against entering the lawsuit, in his case because he thought the county attorney could handle the case.

As to whether it was appropriate to seek damages, Janice Evans, spokeswoman for the mayor, said, “We raised the same exact issues as more than 500 other governmental entities and all parties have agreed to this, as has the court, so we would not characterize it as opportunist.”

Whether the amount that these three entities will receive is “enough” is not one I can answer, nor can I answer it for the 500 others involved in the litigation, not to mention BP itself. It’s something, and I’m quite sure it will be put to good use.

Circling back to city finances

I have three things to say about this.

BagOfMoney

This time, [City Finance Director Kelly] Dowe insists, the $126 million deficit he projects for the budget year that starts next summer is not going to disappear, as past projected shortfalls have. There are no more payments to defer, he says, no more valuable city-owned land to sell.

As a result, the city could be facing layoffs and cuts to services within a year – perhaps pool closures, restricted library hours and parks going to seed, and perhaps worse.

“We have an unsustainable financial model,” Councilman Dave Martin said. “We cannot continue to do this. If we continue down this path, we’ll be belly up.”

Dowe and his boss, Mayor Annise Parker, know Houstonians are confused as to why their government would face layoffs and service cuts while the region’s economy booms.

There are several reasons for this, all a decade or more in the making.

The city has been spending more than it brings in for years, a structural gap driven chiefly by soaring pension costs and, in recent years, a spike in debt payments. Houston typically bridges this gap by budgeting conservatively, being happily surprised when tax revenues exceed projections during the year, then using those “extra” dollars to balance the next year’s budget.

To balance the current budget for the fiscal year that started last week, council approved taking $86 million from last year’s leftover savings, the largest such transfer in a decade.

“Obviously we carry the reserves over from year to year. That’s money that’s not generated or not expected to be generated in the next budget cycle,” said Controller Ronald Green, the city’s elected financial watchdog. “Clearly, if you want to be technical, it is not a structurally balanced budget.”

This history of disappearing deficits has made some council members skeptical of just how dire current projections are. Dowe acknowledged that he originally projected an enormous shortfall for the current budget, which wound up being balanced without layoffs or service cuts.

But he also ticked off a litany of reasons that he says will make another easy fix harder in the future.

First, the city has run into a cap on property tax revenues that voters imposed a decade ago. Houston can collect more property taxes each year than the year prior, but is limited to the combined rates of inflation and population growth.

The city now knows exactly what it will collect each year from its largest source of revenue, and no number of new skyscrapers or townhomes will change that. The typical way the city has wound up with “extra” money at the end of each year is thus gone. Without the cap, the city would have had another $53 million to spend this year.

[…]

Each of the next two years also will bring a $50 million payment to the police pension, triggered under the pension board’s contract with the city because sluggish investment returns have eroded its funding level.

Without an increase in revenue, Dowe said, the only option is to cut services.

“Debt is what it is, pensions are what they are,” he said. “We will continue to get more efficient, we will continue to cut costs where we can, but in the long term it would be hard to say you wouldn’t affect services with the outlook we have.”

Debt payments for past public projects have risen by more than half over the last five years, to $346 million this year, and are projected to reach $411 million by 2020. Pensions are devouring $308 million of the city’s main operating fund this year, nearly three times what is spent on parks and libraries combined.

1. There’s no serious solution to this problem that doesn’t include repealing the revenue cap. Every candidate running for office runs on a promise of promoting economic growth and prosperity. Houston has had that these past few years, but thanks to the cap we’re being penalized for it. Fifty-three million dollars is a lot of money and would do a lot to reduce the scope of the problem we’re facing, and that’s just for this year. You want to argue that we don’t have a revenue problem in Houston I’ll be sympathetic, but that doesn’t mean that throwing away extra revenue like this makes any sense. There is no good reason not to use all available resources.

You may argue that the people won’t go for it, and you may be right. What evidence we have from limited polling certainly suggests that’s a strong possibility. To that I say, how about a little leadership from those who want to be Mayor? Politicians love to talk about “making the tough choices”, yet somehow choices like this never seem to be on the table. To be fair, at least some Mayoral candidates have mentioned this – I know Chris Bell has, I’ll have to check on some others – and Mayor Parker has brought it up as well. Any candidate who says they want to make “tough choices” but doesn’t consider this is to my mind not to be taken seriously.

2. Similarly, I don’t know how anyone can look at the debt figures and not support ReBuild Houston. One of the defining purposes of ReBuild Houston was to pay down existing debt and reduce the amount of future debt needed to pay for infrastructure. Put aside the extra revenue stream that ReBuild Houston represents, why would you want to add to the debt burden at this time? I’m not against using debt to invest in the city’s infrastructure, but now is not a very good time for it. What exactly is the case for going back to a bond-based system of paying for street and drainage improvements?

3. Finally, the pension issue. The choices are the same as they’ve always been – try to convince the Legislature to grant the city the authority to make changes to the pension plan; try to negotiate a different agreement with the firefighters; suck it up and figure out how to pay what we owe. I’m not sure why anyone thinks they’d be more successful at #1 than Mayor Parker has been, and I can’t imagine anyone advocating for #3. Maybe I’m missing something, I don’t know. I don’t know what else there is to say on this.

Sales tax revenues take a dip

Don’t freak out just yet, but do be a little worried.

Houston’s 53-month consecutive span of year-over-year sales tax revenue gains has come to an end, five months into an energy slump analysts said could dent the city’s economic numbers for the rest of the year.

The city’s $50.1 million sales tax revenues for April, received this month as its allocation from the state, represented a 2.3 percent decline from a year ago, according to the Texas Comptroller’s Office.

One month’s spending activity doesn’t represent a trend, and revenues from various sectors of Houston’s economy were all over the map. Among the top-grossing sub-sectors providing tax revenue in Houston, reported collections were down roughly 2 percent at discount department stores and family clothing stores that month compared with 2014, and off 2.6 percent at supermarkets and grocery stores. Full- and limited-service restaurant collections, on the other hand, rose 4.7 percent and 10.1 percent, respectively, figures show.

But as Houston’s sales tax revenues declined 2.3 percent, the state’s $2.6 billion in sales tax revenue represented a 5.2 percent increased over April 2014, suggesting that a sharp downturn in the oil and gas industry so crucial to Texas has affected Houston more significantly than the rest of the state.

[…]

In Houston, sales taxes account for 30 percent of the city budget’s general fund revenue. As the city prepares its next budget, whether the monthly dip is a blip or a more sustained rattle is being monitored, city Controller Ronald Green said.

“I think now’s the time not to panic but for us to kind of determine if there’s going to be a trend in this,” Green said, adding he needs two more months of data to determine whether’s April’s revenues were a trend or an anomaly.

Compared to the doom-and-gloom predictions of late last year, steadying crude prices for the last several weeks are a sign industry is making adjustments, said Ed Wulfe, chairman and CEO of Wulfe and Co., a commercial retail real estate brokerage firm. “I think it has corrected itself already,” he said of the energy downturn. “By and large, we’re starting to get back on the normal speed and level already.”

Crude oil prices began dipping last summer after reaching a peak above $100 per barrel and have hovered around $60 since April.

The effects of that sharp price decline began arriving at the beginning of April, said Jesse Thompson, business economist with the Houston branch of the Federal Reserve Bank of Dallas.

“At this point, the only thing that’s hitting us is what’s happening in the energy market,” Thompson said.

I basically agree with Ronald Green. A one month dip like this can be brushed off as an aberration. Three months of it is a serious problem. If it’s about what’s happening in the energy industry, there’s not much to be done about it except adjust behavior and expectations accordingly. Check back in August and we’ll see where we are.

Meet your Constitutional amendments

A pretty uninspiring bunch, if you ask me.

vote-button

Now that the dust has settled on the 84th Texas Legislature, voters are getting the first official look at which constitutional amendments they will be voting on come November.

Texas Secretary of State Carlos Cascos on Wednesday took the last step to place seven propositions on this fall’s general election ballot, all of which were approved by two-thirds of all state lawmakers during the just-ended session. Per state law, they are chosen randomly in a drawing to assign the order in which each proposition will appear on the Nov. 3 ballot.

All told, they run the gamut of state issues, from the serious to the mundane, and they create a narrative of the session that is not at all inconsistent with what really happened under the Pink Dome.

Here are the amendments, in the order they will appear on your ballot.

Proposition 1 (SJR 1)

“The constitutional amendment increasing the amount of the residence homestead exemption from ad valorem taxation for public school purposes from $15,000 to $25,000, providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount, authorizing the legislature to prohibit a political subdivision that has adopted an optional residence homestead exemption from ad valorem taxation from reducing the amount of or repealing the exemption, and prohibiting the enactment of a law that imposes a transfer tax on a transaction that conveys fee simple title to real property.”

Proposition 2 (HJR 75)

“The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of all or part of the market value of the residence homestead of the surviving spouse of a 100 percent or totally disabled veteran who died before the law authorizing a residence homestead exemption for such a veteran took effect.”

Proposition 3 (SJR 52)

“The constitutional amendment repealing the requirement that state officers elected by voters statewide reside in the state capital.”

Proposition 4 (HJR 73)

“The constitutional amendment authorizing the legislature to permit professional sports team charitable foundations to conduct charitable raffles.”

Proposition 5 (SJR 17)

“The constitutional amendment to authorize counties with a population of 7,500 or less to perform private road construction and maintenance.”

Proposition 6 (SJR 22)

“The constitutional amendment recognizing the right of the people to hunt, fish, and harvest wildlife subject to laws that promote wildlife conservation.”

Proposition 7 (SJR 5)

“The constitutional amendment dedicating certain sales and use tax revenue and motor vehicle sales, use, and rental tax revenue to the state highway fund to provide funding for nontolled roads and the reduction of certain transportation-related debt.”

I will be voting No on #s 3 and 7 and probably on 1, Yes on #2, and I have no idea yet on the others. What about you?

Budget deal

What Christopher Hooks says.

BagOfMoney

Texans, you can put down your pitchforks and douse your torches: The edibles you’ve squirreled away in your emergency bunkers can be safely consumed. Life can begin anew. The tax cut war between House and Senate has been resolved, which means that barring a catastrophic screw-up—say, Comptroller Glenn Hegar realizing he misplaced a decimal point in the revenue estimate—we won’t need that special session on budget issues that legislative observers and hack journalists have worried you all about so much.

Is the package—a $3.8 billion dollar bundle of franchise and property tax cuts—any good? Well, that depends on your point of view. Most everyone, save some Democrats and probably a few right-wing senators, is about to tell you, loudly, that the budget deal is very, very good. There’s a great deal of face-saving to be done. This is the point of the session at which former enemies congratulate each other for the finest and most noble works of government since Periclean Athens: Patrick himself posited that this might have been the best legislative session in the state’s history.

The business lobby did pretty well in the tax deal, but the picture is a bit more complicated for most of the other players. The widespread perception outside the Capitol will be that Patrick “won” by getting some property tax cuts past the House. Meanwhile, Texans are getting a raw deal—with too small a tax break to make a real difference for most, and less money coming down the pike now and in the future for basic services like education.

[…]

Patrick wanted and needed a signature victory for this session, his first. After all this furor, Patrick is likely to win for his constituents a smaller-than-expected tax break that most Texas homeowners—the people whom Patrick is expecting to give him credit—won’t even notice, because they’ll be swallowed up by rising rates and home values. Average homeowners might pay about $120 less in property taxes than they might have otherwise, but how many will notice or care as their taxes continue to go up? The only thing that can bend the property tax curve downward is a substantive reorganization of the state’s overall tax structure. Anything else is a band-aid, and not a long-lasting one at that.

It’s not really the stuff that launches political careers skyward. Some of Patrick’s supporters have said the Legislature can rededicate itself to real property tax reform next session, but that seems doubtful. The economy will likely have cooled, and the state may face a budget hole thanks to the school finance lawsuit and other looming budget issues. This session may have been the last, best opportunity to do a big tax cut deal.

At least the teabaggers aren’t happy, though I suppose that’s the default state for them. The best thing I can say about this session is that it’s almost over, and at least a few of the awful bills that could have passed didn’t.

House passes sales tax cut

Over to you, Danno.

BagOfMoney

The Texas House tentatively approved a $4.9 billion tax relief plan Tuesday that includes a cut to the state’s sales tax, marking a clear line in the sand against the Senate, which favors property tax cuts.

The House voted 141-0 for House Bill 31 by Ways and Means Chairman Dennis Bonnen, R-Angleton, which would cut the state sales tax rate from 6.25 percent to 5.95 percent. If the bill reaches the governor’s desk, it would be the first cut in the state’s sales tax in Texas history.

Bonnen presented his sales tax cut as more impactful than the Senate’s proposal, which would increase homestead exemptions to lower local school property taxes. The Legislature passed an even larger property tax cut in 2006 that was widely viewed as underwhelming by homeowners due to increases in property values and local tax rates.

“A sales tax cannot be eroded by a local tax hike or rising appraisals,” Bonnen told the House. “We would be using our tax dollars for a tax that we control.”

My personal choice would be to invest this money in education, infrastructure, shoring up the pension system, that sort of thing, but you know what they say about elections and consequences. If we have to cut taxes, I’ll take the sales tax cut, as it’s more progressive and doesn’t require advanced shenanigans with the spending cap. But let’s keep things in perspective here. What this cut means is that if you spend $100, you will save a grand total of thirty cents on your sales tax – instead of paying $108.25, you’ll owe $107.95. The claim is that this cut will save the average family something like $170 per year, well to get that amount of savings that family would have had to spend some $57,000 on taxable goods and services during the year. That’s more than most families of four in Texas make in a year. I guarantee you, nobody is going to notice this. That’s the real problem here – any tax cut will cost the state billions, but will accrue only modest benefits to the people. I can only wonder what if any effect this will have on the next campaign, assuming this goes through the Senate as well. BOR has more.

Bill filing deadline has passed

Believe it or not, we are almost halfway through the legislative session, and we have now passed the point where new bills can be filed.

130114152903-abc-schoolhouse-rock-just-a-bill-story-top

Racing to beat a deadline for filing bills, state lawmakers on Friday submitted hundreds of measures on everything from abolishing the death penalty to the licensing of auctioneers.

By the time the dust settled, 928 bills had been filed in the state House and Senate on Friday, setting the chambers up for a busy second half of the legislative session.

“Now, it’s game on,” longtime lobbyist Bill Miller said.

In all, some 8,000 measures are now before the 84th Legislature, including 4,114 House bills, 1,993 Senate bills and 1,771 resolutions.

[…]

The most high-profile bill filed Friday was an ethics reform package supported by Gov. Greg Abbott that long had been expected to be submitted by Sen. Van Taylor, R-Plano. Abbott had declared ethics reform a legislative emergency item during his State of the State address last month.

Taylor’s proposal, known as Senate Bill 19 and also backed by Lt. Gov. Dan Patrick, would require state officials to disclose contracts with governmental entities, prohibit lawmakers from serving as bond counsel for local and state governments and make departing legislators and statewide elected officials wait one legislative session before becoming lobbyists.

“There is no more valuable bond in democracy than the trust the people have with their government,” Taylor said in a statement. “The common-sense ethics reform outlined in Senate Bill 19 will strengthen that bond and send a clear message to the people of Texas that there is no place in government for those who betray the trust given to them by the voters.”

Tax policy also was a common theme, with [Rep. Dennis] Bonnen submitting his hotly anticipated proposal to cut business and sales taxes.

The Senate, which in some ways has been moving faster than the House, already has debated several tax proposals, and the issue is expected to be a priority focus of the session.

The Trib highlights a few bills of interest.

— House Ways and Means Chairman Dennis Bonnen, R-Angleton, filed his long-awaited proposals to cut the rates for both the margins tax paid by businesses and the broader state sales tax. The margins tax bill, House Bill 32, is identical to one filed by Senate Finance Chairwoman Jane Nelson, R-Flower Mound. The measures should draw the House more into the tax cut debate this session, which until now has been focused more on the Senate, where Nelson has already held hearings on some high-profile measures.

— Several measures filed Friday aimed at allowing Texas to change its approach to immigration, even as broader proposals stall in Washington.

House Bill 3735 by state Rep. Byron Cook, R-Corsicana, seeks to establish a partnership with the federal government to establish a guest-worker program to bring skilled and unskilled labor to Texas.

House Bill 3301 by state Rep. Eddie Rodriguez, D-Austin, would recognize undocumented Texans as “citizens” of the state. It would allow them to apply for driver’s licenses, occupational licenses and state IDs if they meet certain residency criteria and are can verify their identity.

“It also opens the door for future conversations about the very real fact that these Texans without status are here, they are not leaving, and we should be doing everything we can to help them find employment, housing and opportunity,” said Laura Stromberg Hoke, Rodriguez’s chief of staff.

— House Bill 3401 by state Rep. Matt Schaefer, R-Tyler, seeks to establish an interstate compact between interested states for the detection, apprehension and prosecution of undocumented immigrants.

— Looking to add restrictions on abortion, state Rep. Jodie Laubenberg, R-Parker, filed House Bill 3765 to beef up the state’s informed consent laws when it comes to minors. Texas law already requires patients seeking an abortion to go through the informed consent process, but Laubenberg’s bill would require notarized consent from a minor and a minor’s parent before an abortion is performed.

— House Bill 3785 from Rep. Marisa Marquez, D-El Paso, would permit patients with cancer, seizure disorders, PTSD and other conditions to medical marijuana. The measure is broader than other bills filed this session that would only allow low-level THC oils to be used on intractable seizure patients.

— The National Security Agency might have some trouble in Texas if Rep. Jonathan Stickland, R-Bedford, gets his way. House Bill 3916 would make it illegal for any public entities to provide water or electric utility services to NSA data collection centers in the state.

— State Rep. Joe Deshotel, D-Port Arthur, filed a pair of measures, House Bill 3839 and House Joint Resolution 142, which would ask voters to approve the creation of as many as nine casinos. Under Deshotel’s plan, most of the casinos would be built near the Texas coast, and a large portion of the tax revenue would go toward shoring up the troubled Texas Windstorm Insurance Association, the insurer of last resort for coastal Texans.

— In an effort to pave the way for a Medicaid expansion solution that would get the support of conservatives, state Rep. Garnet Coleman, D-Houston, filed House Bill 3845 to request a block grant from the federal government to reform the program and expand health care coverage for low-income Texans. Though GOP leaders have said they won’t expand Medicaid under the federal Affordable Care Act, they’ve asked the feds for more flexibility to administer the program. Coleman’s proposal, titled the “The Texas Way,” intends to give the state more wiggle room while still drawing some Republican support.

Here’s a Statesman story about the casino bills. There’s been a distinct lack of noise around gambling expansion this session, which is change from other recent sessions. I suspect Rep. Deshotel’s proposals will go the way of those previous ones, but at least there’s a new angle this time.

Here’s a press release from Republicans Against Marijuana Prohibition (RAMP) in favor of the medical marijuana bill from Rep. Marquez; there is a not-yet-numbered companion bill to HB3785 in the Senate, filed by Sen. Jose Menendez, as well. Two other, more limited, medical marijuana bills, the so-called “Texas Compassionate Use Act”, were filed in February. I don’t know which, if any, will have a chance of passage. I will note that RAMP has been admirably bipartisan in its praise of bills that loosen marijuana laws. Kudos to them for that.

If you’re annoyed at Jodie Laubenberg going after reproductive choice again, it might help a little to know that Rep. Jessica Farrar filed HB 3966 to require some accountability for so-called “crisis pregnancy centers’. Her press release is here.

I am particularly interested in Rep. Coleman’s “Texas Way” Medicaid expansion bill. (A companion bill, SB 1039, was filed by Sen. Jose Rodriguez.) I have long considered “block grant” to be dirty words in connection with Medicaid, so to say the least I was a little surprised to receive Rep. Coleman’s press release. I have complete faith in Rep. Coleman, so I’m sure this bill will move things in the direction he’s been pushing all along, but at this point I don’t understand the details well enough to explain what makes this bill different from earlier block grant proposals. I’ve sent an email to his office asking for more information. In the meantime, you can read Sen. Rodriguez’s press release and this Legislative Study Group coverage expansion policy paper for more.

Finally, one more bill worth highlighting:

The proposal introduced by out lesbian Rep. Celia Israel (D-Austin) would prohibit mental health providers in Texas from attempting to change the sexual orientation or gender identity of people under 18. Those who violate the law would face disciplinary action from state licensing boards.

Israel acknowledged that House Bill 3495 has little chance of passing the Republican-dominated Legislature, and it wouldn’t apply to faith-based practitioners, but she said it’s an important response to the Texas GOP’s 2014 platform plank endorsing reparative therapy.

“I don’t think that they recognize how hurtful these kinds of things can be,” Israel told the Observer. “To suggest that some young kid that happens to be gay is less than normal is very hurtful and harmful and dangerous, and I think I put myself back in those years when I was first discovering who I was. … I felt strongly about introducing a bill that was a counter to that, to say, ‘We don’t need fixing. We just need your love.’”

Virtually all of the major medical and mental health organizations have come out against reparative therapy, from the American Psychological Association to the American Medical Association and the American Counseling Association.

I agree that this bill isn’t going anywhere, but as I’ve been saying, that doesn’t mean it shouldn’t have been filed. Good on Rep. Israel for doing what’s right. Equality Texas has more.

Voodoo economics

Also known as Dan Patrick’s budgetary contortions.

FerrisB_VoodooEconomics

Lt. Gov. Dan Patrick, joined by the Texas Senate’s lead budget writers, announced “a new bold proposal” Wednesday morning to allow lawmakers to cut property taxes and pay down the state’s debt without busting the state’s politically charged spending cap.

“Gosh darn, we know our businesses and taxpayers need tax relief,” Patrick said at a press conference. “But because of the cap, we are limited in what we can do.”

Lawmakers entered the session with an estimated $113 billion to haggle over, but are expected to hit the state’s spending cap at $107 billion. Spending beyond the cap would require a simple majority vote in the House and Senate, a move that Republican leaders have repeatedly insisted will not happen this session.

The measures filed Wednesday are an attempt to provide political cover for Texas lawmakers to tap more of the billions of dollars sitting in state coffers without being viewed by voters as freewheeling spenders. Republicans in particular are wary of a vote for breaking the state’s spending cap being used against them in future primaries to paint them as fiscally irresponsible.

“We have more money on hand than we believe any Legislature has ever had at one moment in time dealing with budget issues,” Patrick said. “There is no support for exceeding the spending cap, but that also means that when we leave, we will have approximately $4.5 to $5 billion in the state’s checking account.”

While a simple idea in theory, the spending cap in practice is a complicated measure that even some members of the Legislature have trouble grasping. The Texas Constitution says the government can’t grow faster than the state’s economy. State leaders set a growth rate of 11.68 percent for this session in December, based on the estimated rate of growth in Texans’ personal income over the next two years.

“For 36 years our state spending cap has helped enforce fiscal discipline, and we should be very cautious about any attempt to weaken it,” House Speaker Joe Straus said in a statement responding to Patrick’s proposals.

Well, gosh darn, Dan Patrick categorically refused to consider exceeding the spending cap in 2013 when some people wanted to more fully restore the cuts to public education spending, so right there is your first clue that this is little more than a gimmick and an attempt to hardcode Republican priorities into the state constitution. I’m a bit pressed for time, so I’ll point you to a couple of good analyses of this. First, from Ross Ramsey:

Lots of things would be possible right now without that spending cap in place; this year, it leaves as much as $6 billion in the state treasury that is out of budget writers’ reach. That has lawmakers dreaming of how to get around the cap, and there are ways to do that.

The first one is simple: Vote to spend more. If a majority of senators and representatives agree, they can spend more than the cap allows. This requires some intestinal fortitude from legislators, especially in primaries where voters will want to know how the state budget ballooned so quickly. Price-sensitive voters won’t like the answer unless they can be convinced that the extra money was well-spent.

A second, proposed Wednesday by Lt. Gov. Dan Patrick and Sens. Jane Nelson, Juan “Chuy” Hinojosa and Kevin Eltife, is complicated. They want to change the constitution to exempt spending on tax cuts and debt payments from the calculation of a spending cap. They would be able to take care of other items on their wish lists and keep spending past the cap on taxes and debt. Voters would have to approve, and it would take approval from two-thirds of the House and two-thirds of the Senate to get the measure to voters.

That’s more complicated, but it fits the recent pattern established by the state’s officeholders. They are scared to death of voters — so much so that they rely on a “Mother, may I?” approach to tough votes.

For two Novembers in a row, the state of Texas has gone to voters asking for more money, first for water and more recently for transportation.

Those didn’t involve taxes — lawmakers are allergic to that. But they were nervous about spending money, even on popular things — water projects during a drought and highway money for the state’s perpetual traffic jam — and asked voters for permission instead of just writing the checks themselves.

The state had the money it needed, sitting in the so-called Rainy Day Fund, but lawmakers didn’t want to just write a check themselves, for fear they would be labeled spendthrifts in the next round of primary elections.

Those would be Republican primary voters, of course, since those have always been the only voters Dan Patrick cares about or listens to. I’m old enough to remember back in 2011, during the (now known to have been mostly phony) budget crunch, when everyone compared that situation to households that cut back and tighten their belts and all those other virtuous things during hard times. Well, I don’t know how it is at your house, but at mine if the roof starts to leak or if the water heater breaks, I spend what I must to get it fixed. Somehow, that part of the household-as-budget-analogy never gets brought up.

And from Christopher Hooks:

The proposal makes a certain sense from the Democrats’ point of view—busting the spending cap probably means more money will go to state needs like education, even if Patrick wins his tax cuts. And it makes a certain sense for somebody like Eltife, who won’t have to stand in the way of tax cuts while other fiscal needs get attention, too.

But from Patrick’s POV, it’s a weirdly craven move. For one, he’s proposing to bust the spending cap—a sacred cow among conservatives—while saying loudly that he’s proposing to preserve it. And it contains a certain measure of political cowardice; if legislators wanted to, they could vote to bust the spending cap this session with a simple majority vote. Instead, they’re asking voters to make the hard choice for them, a move that seems eerily reminiscent of the dreaded Sacramento style of governance.

Furthermore, the amendment, if it passed, would privilege tax cuts over other kinds of spending. If the Lege ends up with $6 billion in additional revenue over the spending cap next session, it would virtually assure that that money would produce more tax cuts rather than, say, go back to schools or health care or roads.

Finally, it’s a move that’s emblematic of Patrick’s emerging leadership style—impulsive, seemingly thought-up on the fly and done with little consultation with his legislative partners. House Speaker Joe Straus gave an exceptionally cool statement in response: “For 36 years our state spending cap has helped enforce fiscal discipline, and we should be very cautious about any attempt to weaken it.”

But Patrick’s proposal points to a reality about the new era in the Lege: Patrick and the generally suburban-oriented senators who represent the new vanguard are not amenable to government spending and value tax cuts above almost all else.

Yes, that’s what this is about. It’s what basically all of the budgetary tricks and sleights-of-hand are about, including the spending cap itself. It’s a convenient excuse for not doing what you didn’t want to do anyway, like restoring cuts to public education, and it’s an opportunity to restrict the terms of debate further by forcing certain priorities ahead of others. I feel the same way about things like proposals to dedicate certain taxes that have otherwise been for general use to specific purposes. I get why Sen. Hinojosa is playing along, but I fear he’s being suckered. This is a bad deal, and we should hope the House rejects it.

The games our tax system plays

I find this just fascinating.

BagOfMoney

It’s been described as bribery, taxation without representation and a shady political maneuver. Others have called it an innovative way to deal with budgetary problems and get things done.

Ever since Texas lawmakers made it more difficult for cities to absorb suburbs into their boundaries 15 years ago, Houston has been quietly cutting deals with municipal utility districts to levy a 1 percent sales tax on purchases in neighboring communities.

The agreements for “limited purpose annexations” now generate tens of millions for Houston and for the utility districts, which split the revenue. But some question the appropriateness of the deals.

Houston seems to play off suburban fears of annexation to demand taxes in exchange for promises to leave them alone, said Paul Lewis, a professor of local politics and urban development at Arizona State University.

“It’s a kind of bribery,” he added.

Some local officials wonder whether the agreements lead to wasteful spending that lacks transparency. The revenue is not subject to the voter-approved revenue cap that has forced the city to lower its property tax rate and slash budgets. Critics also note that Houston provides no services to most of these suburban areas, whose residents can’t vote in city elections.

“It’s unconstitutional,” Fort Bend County Judge Bob Hebert said. “I thought we fought a war back in the 1700s on ‘taxation without representation.’ ”

Utility district leaders defend the agreements, noting that they take half the money collected and receive a contractual promise they will not be fully annexed for 30 years.

City officials agree that the agreements are fair. Census figures show that nearly two-thirds of those who work in Houston live outside of the city limits. City officials note that suburban residents attend plays in the Theater District, watch free concerts at Memorial Hermann Park and put wear and tear on city property.

“It is the primary tool we have to deal with the growth that goes on outside the city and the burden put on infrastructure by suburban citizens without our property tax,” Houston Finance Director Kelly Dowe said.

You can read the story and decide its morality and/or constitutionality for yourself. Personally, as a resident of Houston, I have no problems with it. What occurs to me in reading this is that it’s a natural outcome of our overall system of taxation in Texas, which is heavily dependent on sales and property taxes, and also on legal ways to minimize one’s sales and property taxes. There’s one way we could avoid all the problems associated with a tax system designed around political boundaries, and that’s to switch to one that is primarily dependent on income taxes instead. Of course, there are plenty of ways to game an income tax system, too, so it would most likely substitute one set of shenanigans for another. But at least it would be something different for us to argue about.

From the “Simple answers to simple questions” department

The Statesman asks “Would Dan Patrick’s tax plan lower your taxes?”

Efforts to shift toward sales tax in lieu of property and income taxes have in recent years gained momentum in Republican-led states — even as economists warn that this sort of tax reform is likely to harm the majority of taxpayers.

Economists point out that sales tax is highly regressive, meaning its net result is savings for wealthy people, who enjoy a lower tax rate overall; poor and middle class taxpayers, however, pay more tax as a proportion of their income and thus bear a heavier burden for funding government services.

Texas’ tax system is already considered regressive because it doesn’t levy a personal income tax and instead relies heavily on sales tax, the state’s single biggest source of nonfederal income, $27.4 billion in fiscal 2014.

Counting both sales and property taxes, Texans who earn less than $19,000 a year are taxed an average of 12.6 percent of their income, according to a 2013 study by the Institute on Taxation and Economic Policy, a nonpartisan think tank in Washington.

The institute found that a family earning $32,000 to $52,000 — the middle 20 percent — will be taxed an average of 8.8 percent of their income. The top 1 percent of earners, those earning $437,000 or more, are taxed a much lower average of 3.6 percent.

Matt Gardner, executive director of the nonprofit institute, says this disparity will likely worsen if sales tax is increased to buy down local property taxes, as Patrick has proposed.

“Unless you have some way to offset the increase in sales tax, it’s pretty clear that this is going to hurt low-income people,” Gardner said.

[…]

The Lone Star Card piece of Patrick’s plan appears similar to a failed 2005 proposal, which was nixed from tax reform legislation that cut property taxes paid to school districts and swapped that funding with state sales taxes. This is the measure that allowed the state to cut $5 billion to public schools in later years and spurred a protracted court battle between school districts and the state (a state district judge, citing several reasons, ruled for the second time in August that this financing scheme unconstitutional).

The nixed piece of that plan was a proviso to raise the sales tax rate from 6.25 percent to 6.75 percent, along with a package of other excise taxes and tweaks that would have replaced $4.3 billion in property taxes with $4.8 billion in other taxes.

In the same way that Patrick touts his tax plan would either result in a net neutral or net reduction in total taxes paid by Texans, the Legislative Budget Board in 2005 calculated the fiscal impact of that swap would result in a “net reduction to individuals.”

But beneath that neutrality — the total amount of taxes paid wouldn’t increase — is a stark disparity in distribution. Those with annual incomes in the low $10,000s, the board calculated, would have paid $8.1 million more in taxes by 2007. Middle-income taxpayers, those earning from the $40,000s to low $50,000s, would have paid $151 million more.

Those at the highest income level, $140,000 a year and up? They would have seen a $212 million decrease in their tax liability.

Remember the Legislative Budget Board analysis of that 2005 tax swap plan? It has the answer to the question posed above: Unless you’re in the top five percent, your taxes will be going up. There’s nothing complicated about this. In any “revenue neutral” tax plan, some people win and some people lose. Is anyone surprised at who the winners and losers are in Dan Patrick’s world? I guarantee, this will still be the case when he inevitably comes up with a plan that gets scored as a net tax cut. It will be a big cut for a small number of people, and at best a wash if not an outright increase for everyone else. It doesn’t matter that he hasn’t specified any details yet. They don’t really matter to him anyway – it’s the big picture that counts. This is who he is, and this is what he wants. It’s right there in plain sight.

The Lite Guv debate

It was lively, and it was a good reminder of who Dan Patrick really is.

Sen. Leticia Van de Putte

Sen. Leticia Van de Putte

In the only scheduled debate in their race for lieutenant governor, state Sens. Dan Patrick and Leticia Van de Putte faced off on Monday night in a lively exchange that displayed their divergent positions on everything from health care and immigration to school finance and taxes.

Both candidates played offense: Patrick, Republican of Houston, attempted to portray Van de Putte, Democrat of San Antonio, as “out of step” with Texas voters. Van de Putte used the back-and-forth to try to pin Patrick down on votes he’d taken on cuts to public education. But one of the biggest points of contention in the hourlong showdown in Austin was over the state’s tax structure.

Patrick recently called for reducing the state’s dependence on the property tax to fund public schools and relying on the state’s sales tax instead. On Monday, Van de Putte used Patrick’s position to argue that he would raise the sales tax, which she said would negatively affect businesses and consumers. Patrick sought to clarify his proposal, saying he would only support increasing the sales tax “by a penny or two” to compensate for reduced revenue from property taxes.

“There are two candidates on this stage, and I’m the only one that doesn’t want to raise your sales taxes,” Van de Putte said. “To burden Texas businesses and families with a sales tax increase … well, that’s not being pro-business.”

There’s video of the debate here if you missed it or want to share it with someone else that didn’t see it but needs to. The Observer liveblogged it. Writer Forrest Wilder expressed amazement at Patrick’s admission that he’d raise the sales tax to finance a property tax cut, but he’s been saying this all along. I’ve been saying all along that someone needs to point out just how much Dan Patrick himself would benefit from the kind of tax swap he’s proposing. It’s not like we haven’t seen this before, after all.

Burka summed it up as follows:

The most interesting thing about the debate was Patrick’s persona. He felt no need to soften his message or appeal to more mainstream voters. This is exactly who he is, and who he wants to be: a true conservative radical.

Good to know his phony claims of being compassionate didn’t last long. I still don’t know why anyone would have believed him in the first place. The Chron story is here, and PDiddie, EoW, Juanita, Newsdesk, the TSTA Blog, and the Current has more.

Dan Patrick sightings

I doubt that the Chron’s calling out of Dan Patrick had anything to do with him appearing in public, in the daylight, where there might be people that don’t vote Republican, but it was good timing anyway.

“Oozing charm from every pore I oiled my way around the floor”

Now that Patrick is a heavy favorite in his first statewide race, for the powerful position of lieutenant governor, his handlers have hit upon a new strategy for the typically outspoken candidate: Keep the man corraled until after the election.

“At this time the senator does not plan to meet with editorial boards,” his communications director wrote the Chronicle last week. And in a news story, (“Where’s Patrick? Hiding in plain sight on the trail? Page A1, Sept. 12), the Chronicle’s Austin bureau detailed how the 64-year-old Republican candidate has gone MIA. He does not release a schedule of his appearances and limits meetings to sympathetic audiences.

Patrick’s strategy, as his handlers see it, is akin to the mighty Texas Aggies running out the clock against the boys from North Louisiana Barber College (go Clippers!) They refuse to acknowledge two distinct differences: Politics ain’t beanbag (as the saying goes) or football, and the Democratic candidate, state Sen. Leticia Van de Putte of San Antonio, is a worthy opponent.

Even though Texas hasn’t elected a Democrat to statewide office since 1994, Van de Putte has something to say, and that makes Patrick and his handlers skittish.

“Democrats are not a dying breed in Texas,” a candidate told us a few weeks ago. “But Democratic voters are.” That means that if you’re a Republican, the strategy is: Keep your head down (and your mouth shut, in Patrick’s case) and you’ll win. The Texas GOP views the general election as a road bump, knowing that the bulk of voters continue to be older, whiter suburbanites who lean red.

Patrick’s refusal to meet with editorial boards around the state isn’t an insult to newspapers. It’s an insult to the people of Texas. They deserve to know where both candidates stand on the issues. They deserve to see both candidates in action, in whatever forum available. That’s what a campaign is all about.

Some 27 million people are proud to call themselves Texans. Patrick and every person who pays a filing fee owes them the dignity of talking about their capacity to lead – in campaign appearances before general audiences, in editorial boards, debates, town-hall meetings.

So lo and behold, he shows up for a fifteen minute press conference – not clear if any questions were allowed to be asked of him, but whatever – surrounded by his buddies in the business lobby.

The 15-minute event in a downtown Austin office building was Patrick’s first news conference since winning the runoff primary against Lt. Gov. David Dewhurst in late May, and the general-election frontrunner clearly was sensitive to the recent criticism over his low-profile campaign.

Patrick boasted of 1,300 individual meetings with Texans during the campaign. “Over the last several months, I’ve been the hardest working guy on the campaign trail,” he said.

The focus on business in the rare public appearance is unsurprising as it is an important constituency for Republicans that Van de Putte has made a point to court.

The Democrat released a jobs and economic development proposal early in the campaign and repeatedly has highlighted support from business owners in news releases.

Earlier this week, San Antonio construction magnate Henry Bartell Zachry Jr. and Ed Whitacre, a former CEO at AT&T and GM, hosted a fundraiser for her at a downtown San Antonio business club.

On Friday, Van de Putte was headed to an Austin fundraiser hosted by the co-founder of an advertising agency.

Patrick also has found himself disagreeing with the business community on some key issues.

He voted against final passage of the state budget last session and has been the most vocal hard-liner on the campaign trail when it comes to immigration and border security.

The Texas Association of Business supported the budget and has been pushing for a guest worker program, but still is endorsing Patrick.

Yes, and the Farm Bureau endorsed him, too. So the next time you hear either of them complain about anti-immigrant Republicans, you’ll know they don’t mean it. You cannot support comprehensive immigration reform and Dan Patrick at the same time. It’s like claiming to support peace while selling arms to all comers.

Patrick then put in an appearance at TribFest, and reminded us why he’d be so horrible if given a position of real power.

Patrick, who took the stage first with Tribune CEO and Editor-in-Chief Evan Smith, said the state should transition from depending solely on property taxes for funding public schools and instead rely more on a sales tax.

“It’s not increasing, it’s a swap,” Patrick said, when asked whether this would affect his standing within the business community.

While the Texas Legislature in 2013 restored some of the billions of dollars in public education spending it cut in 2011, Patrick said he would be apprehensive about allocating additional dollars to failed schools, adding that the state should rework the way it funds its schools.

Van de Putte said that if she were lieutenant governor, she would prioritize school funding during the budget battle that develops during the legislative session by tapping the surplus in the state’s coffers as it heads into the next session.

“I know that Texans value investment,” Van de Putte said.

Yes, the old property-taxes-for-sales-taxes swap. Patrick tried to peddle it as no big thing.

Patrick said property taxes have become excessive for too many Texans and he believes the public would support a tax swap that spreads out the burden of paying for schools and state programs.Texas schools are primarily funded with local property taxes and state revenue – including sales taxes.

“What I have always believed is we need to transition from depending (so much) on property taxes to more of a sales tax base that requires more people paying,” Patrick said at a political forum in Austin.

“This is something we need to have a serious discussion about. I am talking about bringing senators and hopefully House members together and being honest about tax policy,” he said, pointing out that many Texans cannot afford to keep paying higher and higher property taxes. School property taxes make up about 60 percent of the average property tax bill.

Texas Tribune Editor in Chief Evan Smith, who separately questioned both Sens. Patrick, R-Houston, and Van de Putte, D-San Antonio, asked Patrick about complaints that a higher sales tax would be regressive and increase the tax burden of lower income families.

“If you take an extra penny or two, would a person stop buying something because it costs $1.10 instead of $1.08?” he asked, referring to the current sales tax of 8.25 percent in most areas of the state. The tax swap should be set up so that people below the poverty level are exempted from sales taxes. “It would not be a tax on the poor. If you want to do something about a tax on the poor, let’s get rid of the lottery,” he said.

When Dan Patrick talks about this, you need to keep in mind two things:

1. Any property-tax-for-sales-tax swap will have winners and losers, and you can guess which one Patrick would be. I guarantee you, this would be a huge windfall for people like Dan Patrick.

2. If you believe that the kind of property tax cut Dan Patrick would want to propose could be fully funded by a two-cent increase in the sales tax, I’ve got a business margins tax I’d like to sell you.

So keep talking, Dan. Our best bet is that people pay attention to what you’re saying. In the meantime, the Corpus Christi Caller became the first, but surely not the last, newspaper to endorse Sen. Leticia Van de Putte.

Teacher health insurance costs

Another thing on the list of things the Legislature needs to deal with but won’t.

Health care insurance costs for hundreds of thousands of Texas teachers and other public school employees are scheduled to go up again this fall, prompting renewed calls from educator groups for the state to pick up more of the cost of employee premiums.

The biggest increase will be experienced by those seeking basic coverage for themselves and family members. Their monthly premiums will jump $85 to a high of $1,145 a month, nearly two and a half times the national average of $472 a month. Similar coverage in the private sector would cost around $407 a month, according to a recent Bush Institute study on teacher health care costs.

“The current policy of imposing ever-greater costs on employees is not sustainable,” said Ted Melina Raab, spokesman for the Texas chapter of the American Federation of Teachers. “It is putting decent, affordable coverage out of reach for growing numbers of school personnel.”

More than 280,000 public school employees – roughly three in four teachers, principals, administrators and other staff – receive health insurance through the Teacher Retirement System of Texas. The insurance program, called TRS-ActiveCare, was created to provide a health care option to working teachers whose districts did not offer their own plans.

Last Friday, the TRS board agreed to increase monthly premiums across most TRS-ActiveCare plans.

Since 2002, the state’s share of premiums has remained at $75 a month. During that same period, some educators seeking coverage for just themselves have seen their premiums increase 238 percent.

Even with the state’s monthly contribution of $75 and a $150 base contribution required from school districts, some employees still will pay upwards of $920 a month for basic family coverage.

“These increases amount to pay cuts,” Clay Robison of the Texas State Teachers Association said, noting the average teacher in the Lone Star State makes under $50,000 a year. “It really has become a burden for some of these teachers.”

This is a feature and a bug of the employer-subsidized insurance model. As we know, employers that provide health insurance plans for their employees pay a significant fraction of the cost of the premiums. This makes health insurance a lot more affordable for many people, but it means many of them have no idea how much their insurance really costs, and it means that an ever-increasing percentage of their total compensation is going to health insurance and not to, you know, salary. But that’s the world we live in, and Robison is exactly right – if the state is not upping its share of the payments, then it is like a pay cut for the teachers, since they’re bearing the full brunt of it. That’s just not right.

The solution, educator groups and districts agree, lies with the legislature. Teacher groups point to the fact that lawmakers and other state employees are covered by the Employees Retirement System of Texas health insurance plan, which pays 100 percent of monthly premiums for individuals and half of dependent coverage.

“School district employees are conveniently thought of as state employees for some things, not thought of as state employees for other things,” said Texas AFT President Linda Bridges, citing increasing performance benchmarks placed on public teachers by state officials. “We think school employees should have health care as good as the governor.”

[…]

State Rep. Mike Villarreal, D-San Antonio, said state lawmakers have a clear role to play in reducing health care costs for teachers.

“Here is an area where clearly the state has a role to play,” said Villarreal. “Clearly, the legislature can take actions to reduce the costs for our teachers in a way that doesn’t interfere with the authority of superintendents and principals.”

State Sen. Bob Deuell, the Greenville Republican ousted by tea party candidate Bob Hall, thinks this will be a hard sell in a legislature keen on budget cuts.

“If you increase the premiums, you have essentially cut the salaries of teachers at a time when they’re not being paid enough already,” said Deuell. “I doubt very seriously the teachers are successful in getting this issue – or any other issue – through next year.”

This is where I point out that Texas’ revenue collections are going gangbusters, meaning the Legislature will have plenty of money to work with. The combination we have of unmet needs, neglected infrastructure, and available cash is one you’d think would be amenable to actually finding solutions to the problems we face. Unfortunately, that requires a level of rationality in the Legislature that doesn’t exist. Can’t do much about the Legislature but we can change direction at the top of the state. It’s the best hope we have.

Collier’s sales tax criticism of Hegar makes the news

That’s how you do it.

Mike Collier

Mike Collier

Democrat Mike Collier, a certified public accountant from Houston, will start airing television ads criticizing opponent Glenn Hegar, a Republican state senator from Katy, for his support to phase out property taxes and increase state sales taxes.

Collier and Hegar are vying to replace outgoing Comptroller Susan Combs, a Republican.

The 30-second ad, which will air in Houston, uses video of Hegar touting his position at a January meeting of We The People-Longview Tea Party.

“I don’t like the property tax, never have,” Hegar says in the video. “I think we should replace it. The best thing to replace it with is a consumption-type tax, a sales tax per se.”

Later in the ad, a male announcer says, “Mike Collier has a better plan: Forecast revenues accurately. Invest in our schools. And, hold the line on taxes.”

[…]

Local property taxes account for roughly 47 percent of tax revenue in Texas, according to a 2012 report from the comptroller’s office. State and local sales taxes make up 32 percent of revenue.

Another 2012 study – written by former deputy comptroller Billy Hamilton and published by a Republican group called Texas Tax Truth – said consumers would have to pay up to 25 percent in state sales tax to make up for the approximate $45 billion in lost revenue caused by abolishing property taxes.

“There’s no way that Hegar can make a sensible convincing policy point that we should get rid of the property tax in favor of a broader, larger sales tax,” said Cal Jillson, a political scientistat Southern Methodist University.

And, the shift from property taxes would deprive local governments, school districts and other entities of their primary method of revenue collection, said John Kennedy, an analyst at Texas Taxpayers and Research Association. That would mean municipalities would have to rely primarily on the state to finance their operations.

See here for the background. Via TrailBlazers, here’s the ad in question:

Can I just say how excellent it is to have a competent Democratic candidate running for Comptroller? Here’s who we had in the past three elections:

2010: Nobody
2006: Fred Head
2002: Marty Akins

Arguably, that’s in descending order of effectiveness. I could be persuaded to swap Head and Akins. Basically, Collier is the first serious Comptroller candidate we’ve had since Paul Hobby. It’s a beautiful thing.

But, Collier’s line of attack isn’t guaranteed to stick, Jillson said. The Nov. 4 election is seven months away and voters may not remember a fight over taxes from April, he said.

Jason Stanford, a consultant working on the Collier campaign, said the Democrat’s team plans to maintain this line of attack through the November election.

“We can’t play this race according to the old rule book,” Stanford said. “We have to make this race about actual ideas and competence.”

The thing is, Collier could keep up this line of attack all the way through November without ever repeating himself, because there’s so many ways Hegar’s tax swap is attackable. Consider:

– Local taxing entities – counties, cities, school districts – would essentially cede all taxing authority to the state. Do you want local control over your city and school district budgets, or do you want to hand all that to Austin?

– Do you want to start paying $25,000 for a $20,000 car? With Glenn Hegar’s tax plan, you will.

– Unless you own a million dollar home, your taxes are going up. Unless you live in a place with a lot of retail activity, your city and your schools are going to get screwed.

– Can you imagine the black market that will spring up with a 25% sales tax? The Comptroller’s office will have to become an arm of the IRS to ensure adequate collections.

And on and on. Collier will still have to raise the money to get that message out, but having that message will likely make it easier to raise the dough. There’s no downside here. Burka and EoW have more.

Collier hammers Hegar for property tax idiocy

Good.

Mike Collier

Mike Collier

During the recent Republican primary for state comptroller, state Sen. Glenn Hegar repeatedly endorsed eliminating local property taxes in Texas.

Borrowing from GOP opponent Debra Medina’s 2010 playbook, Hegar urged a shift to sales taxes to make up the more than $40 billion a year of revenue that cities, counties, school districts and other local governmental entities would lose.

Hegar, R-Katy, even suggested a very rapid transition to the new tax system. At a Longview tea party gathering in January, he told a man in the audience, “You just do it.”

This week, though, the governing implications of so massive a shift seem to have cooled Hegar’s jets.

Burying the property tax, after all, would require leaders to more than double the current rates of all state and local sales taxes.

See Exhibit 1 on page 1 (or page 5 of the PDF) of this comptroller’s report. You can readily see that state and local sales taxes, combined, yield about 32 percent of all state and local tax revenues in Texas. That compares with a whopping 47 percent raised by local property taxes. You get the picture.

On Thursday, Hegar campaign manager David White said Hegar “has been clear that we are many years away from being able to implement such” a shift from property tax to sales tax.

White repeated a response he gave The Dallas Morning News on Tuesday, saying “Glenn will review all options to reduce the burden on taxpayers.”

Democratic comptroller nominee Mike Collier, though, has blasted Hegar’s happy talk on property tax during the primary. Collier, a Houston businessman, called it an “unimpeachably bad” policy idea that would produce a monster increase in sales tax, shift power away from localities to the Legislature and “put our schools at unnecessary risk.”

He warned Hegar’s “promise” to eliminate the property tax would require sales tax “to be at least 20 percent — and possibly as high as 25 percent.” In most Texas cities today, the combined state-local sales tax rate is 8.25 percent. Collier even created an online petition drive so voters can protest “Senator Hegar’s sales tax.”

However, in a Thursday email blast that urged people to sign the petition, Collier incorrectly called Hegar’s proposal a “massive tax increase.” In recent years, Republicans have only advocated tax swaps, which presumably would be revenue neutral.

Still, Hegar seems to be switching gears on property tax abolition, pivoting from a “just do it” battle cry to a chin-stroking, “many years away” proposition. The rhetorical shift has given Collier an opening to start the general election battle — in March, not September.

Actually, Hegar’s idiotic idea would be a “massive tax increase” for a large majority of Texans. The whole idea of a tax swap is that some people wind up paying more, while others wind up paying less. The Republicans have floated various tax swaps in the past, and I’m sure you’ll be shocked to learn that a wealthy minority benefits greatly from them, while everyone else pays more. It’s true, as some people note in the comments to that story and on Collier’s Facebook page, that renters pay property taxes as part of their rent. Let me ask you a question: Which do you think is the more likely outcome of a Hegar-style tax swap – a massive, statewide reduction in rents, or a massive, statewide increase in profits for landlords? Take all the time you need before answering.

Anyway. Whether someone finally explained the math to Hegar or he realized that he might need to do more of a campaign than just pandering to fanatics, he has shifted from “we can do this right now!” to “this idea is many years away from implementation”. And in doing so, he earned a bit of media for Mike Collier. More like this, please. BOR and EoW have more.

Council approves Costco tax rebate

I still don’t think this is a good idea.

The Houston City Council on Wednesday approved a $1 million economic development deal to help Costco build a store outside the city limits.

In a rambling discussion ending in a 12-3 vote, supporters argued that the sales tax rebate would drive further development in the area around the site of the proposed store, at Interstate 10 and the Grand Parkway, generating revenue the city would not collect otherwise.

Opponents said they had heard no argument for why the rebates were needed for the store to be built, or, in Councilman Andrew Burks’ case, said the deal did not ask enough of Costco.

Corporations should take a more active role in funding after-school and summer jobs programs in the city, Burks said, and should give preference to veterans in hiring.

[…]

The store would sit on 14 acres Costco has under contract in the Cimarron Municipal Utility District. The city since 2003 has had an agreement with the district under which the parties split the revenues of a 1-cent sales tax collected within the district’s boundaries. The city provides only animal control services there, and property owners pay no city property taxes.

Economic development experts have said the area is likely to develop without incentives, given that a new segment of the Grand Parkway connecting I-10 with U.S. 290 will open in December. Councilman C.O. Bradford, who joined Burks and Councilman Larry Green in opposing the deal, took a similar approach.

“Is the incentive necessary?” Bradford asked. “I haven’t heard anybody articulate the real need for the incentive.”

Councilman Ed Gonzalez said the proposal was necessary because Costco was considering a nearby site that would generate no revenue for the city.

“While technically, yes, it’s a very lucrative site, very high-profile and likely Costco would still come there, I think to some extent, by us having skin in the game, we guarantee they do come into this area,” Gonzalez said. “I would rather us control some of our own destiny here, make sure this investment is here and leverage our $1 million to bring a much greater return to the citizens of the city.”

See here for the background. I get why Council agreed to this, but the question I haven’t seen asked – let alone answered – is what the return for the city would be compared to what was likely to be built on that property if no rebate was offered. We all agree that something would be built, possibly this very Costco, but even if you accept that Costco would have gone elsewhere, something else would have been put there eventually. As such, it makes no sense to compare the revenue the city will get from making the deal to zero. Compare it to some scenarios where something else gets built, and compare it to that. Is it still worth the money the city is giving up? If it is, then I can live with this. If not, then we need to do a better job of making economic projections.

A tax break where?

I don’t quite understand this.

The Houston City Council on Wednesday will consider giving up to $1 million in tax rebates to a Costco store that would be built outside city limits.

City officials say the proposed 151,600-square-foot warehouse and liquor store, in the 23600 block of Katy Freeway, will act as a catalyst for further development in the area around Interstate 10 and the Grand Parkway, and generate tax revenues the city otherwise would not collect.

[…]

The 14 acres Costco is under contract to buy is in Cimarron Municipal Utility District, with which the city cut a special-purpose annexation deal in 2003. Under the agreement, the city and utility district split the revenues of a 1-cent sales tax collected within the district’s boundaries. The city provides only animal control services there, and property owners pay no city property taxes.

[…]

Without the incentive, Chief Development Officer Andy Icken said, the company likely would have picked a tract it had under contract a mile west of the utility district, near Katy Mills Mall, where no revenue would have been generated for the city.

Icken said the city expects to collect $8 million in sales tax revenues from the store during the life of its annexation agreement, after rebates. The rebates will come from sales taxes generated by the store, and will be used to reimburse Costco for infrastructure work, mainly a road connecting it to the I-10 feeder road. The Cimarron district will pay for soil work to make the site suitable for construction.

Combined, Costco would be reimbursed about $2.5 million. Costco representatives declined to comment on the project or the rebates.

Councilwoman Melissa Noriega said she has concerns about the proposal, but has not decided how she will vote. “It seems like Costco is an awfully big, well-funded company to need that kind of infrastructure assistance,” she said. “Having said that, I know we want to incentivize the kind of retail they produce for the tax rolls.”

I get wanting to have the place built in an area that benefits the city. The usual arguments about this kind of subsidy relocating retail activity instead of increasing it is a bit less concerning when the location of the retail activity is the point. While it is unquestionably true that something is going to be built at this location, given the upcoming Grand Parkway expansion, I get wanting to make it happen sooner, since the city’s revenue sharing deal with the Cimarron MUD expires in 2033, and I get wanting to ensure that what does get built is of top quality. But yeah, I don’t really see why a large well-funded company like Costco needs the incentive. I’m sure they know which location is best for them, and I don’t know how much difference a relatively minor tax break will make to their bottom line. Council should be very skeptical of this.

Bad ideas never die

And so we find ourselves once again talking about tax breaks for yacht buyers.

Just think how much you would save on this baby

From capping the sales tax on yachts to phasing out the state business levy, some lawmakers are pushing for tax breaks even as others say the system is already riddled with too many special-interest exemptions.

The breaks are most often cast as a driver for economic development, and a Monday hearing on the yacht tax break was no exception.

Senate Bill 862 “is not about giving tax breaks to the rich. It is all about jobs and protecting our Texas economy,” said Sen. Larry Taylor, R-Friendswood, who pitched it before the Senate subcommittee on fiscal matters as necessary for the state to compete for boat business.

The subcommittee, which left the bill pending, is trying to have hearings on at least a representative sampling of the tax breaks that have been proposed, said its chairman, Sen. Glenn Hegar, R-Katy. “Obviously, the question always becomes do they, at the end of the day, provide a benefit to the taxpayers overall?” said Hegar.

[…]

A similar measure sank two years ago. Backers emphasized then, as they are now, a decision by Florida to cap its sales and use tax at $18,000. They said that has prompted buyers to purchase and keep their boats in Florida.

As filed, the legislation would cap the amount of boat tax at $15,625 per retail sale, the amount typically paid for a $250,000 yacht. Taylor has a substitute to change that to $25,000.

The subcommittee left the bill pending while it awaits a new fiscal note on the change.

As noted, a similar bill was introduced last session, but it did not pass. The fiscal note for SB862 says it would cost $2,893,000 for the upcoming biennium, which is slightly more than the fiscal note of the previous bill. Perhaps the Legislative Budget Board is forecasting more yacht purchases for this biennium, or maybe it’s just that yachts are more expensive these days. In either case, I doubt that Taylor’s substitute bill will make that much difference in this department.

I expended all the snark I have on this two years ago. There’s only so much time available in a legislative session, and it really says something about John Davis and Larry Taylor that they think this particular issue, which would greatly benefit a very small number of people at the expense of the general revenue fund, is worth their limited time and energy. I haven’t even seen a bogus “economic benefit” report on behalf of the yachters, making the usual dubious claims about how much more money this would actually mean for Texas despite the fiscal note, which is telling in itself. As Rodney Ellis says in the story, our tax code is already an unmanageable jumble of bizarre, obscure, and often needless tax breaks that cost billions for no clear reason. We don’t need to add to that.

More on sunsetting tax expenditures

I say again, this is a good idea that really needs to happen.

Sen. John Carona

The Texas tax code is rich with tax breaks. There are tax breaks for industries relocating to the state and for anyone with an Internet connection. Tax exemptions for groceries and bottled water. Tax holidays for back-to-school supplies. Tax exemptions for golf courses at private country clubs.

It adds up to at least $38 billion a year for the state’s major taxes and school property taxes, the comptroller estimates — hardly pocket change in a state that is expected to collect $80 billion in tax revenue in 2012-13. But no one claims to know for sure how much the state is forgoing because, by law, smaller taxes — those that raise $2.2 billion or less — are excluded from a biennial report by the state comptroller.

Sen. Rodney Ellis

“We have so many exceptions to the tax code, none of us really know how many we have, what they cost, if they make sense or they don’t,” said state Sen. Rodney Ellis, D-Houston.

To get a handle on all those tax breaks, Ellis, along with Dallas Republican state Sen. John Carona, has filed legislation to create a “sunset” process that would eliminate any tax break that isn’t renewed by the Legislature.

“I truly believe every conservative in this Capitol ought to be supportive of analyzing those special government giveaways on a regular basis,” Carona said. “And that’s all this bill seeks to accomplish.”

Just as the state now reviews every agency and its programs on a 12-year cycle, Ellis and Carona want every state and local “tax preference” reviewed on a six-year cycle. The comptroller would set the schedule, the Legislative Budget Board would present the facts, and the Legislature would be forced to reaffirm the tax break or it would die.

Both lawmakers expect that the Legislature would reaffirm most of the tax breaks, including the popular homestead exemption and exclusions for groceries, medical and dental services, and medicines, for example.

But a periodic exam invariably would raise questions. Should golf courses at private country clubs be appraised at less than 10 percent of the land’s market value? Should retailers be paid — some say overpaid — for remitting sales taxes on time? Is there still a need to encourage the spread of the Internet by exempting sales tax on the first $25 of your monthly bill?

Then there are the oddities of the sales tax. Soda is taxed; bottled water isn’t. The services of landscape architects aren’t taxed, but landscape services are. Food meant to be eaten at home is exempt, but not food intended for immediate consumption.

And so on and so forth. If it helps, think of these exemptions and exceptions and what have you as expenditures, because that really is what they are. Expenditures get plenty of scrutiny – too much, sometimes – unless they’re tucked into the tax code. We could have recouped about $2 billion from ending unnecessary tax expenditures back in 2011, but of course the Republicans weren’t interested in cutting that kind of spending. It would be nice if there were some more interest in it this time around. If nothing else, we’re almost certainly going to need to find some more money to comply with the latest school finance lawsuit ruling once the Supreme Court has reviewed it. This is a sensible place to start looking. See here for more.

Amazon fulfills its end of the deal with Texas

Good to see.

Nine months after it struck a deal with the state to bring thousands of jobs and invest millions of dollars in Texas, online retail giant Amazon.com on Wednesday unveiled the first steps toward keeping its end of the bargain.

Amazon said Wednesday it will build three fulfillment centers in Texas, creating about 1,000 jobs. The new facilities will include a 1.2 million square-foot site in Schertz, east of San Antonio; and two sites in the Dallas-Fort Worth area — a 1 million-square-foot center in Coppell and a 1.1 million-square-foot facility in Haslet.

The fulfillment centers in Schertz and Coppell will handle the shipment of “larger items—anything from televisions to bbqs, for example,” Amazon said. The Haslet center will ship smaller items like books, small electronics or DVDs, the company said.

“We look forward to putting more than 1,000 Texans to work at our new fulfillment centers in Schertz, Coppell and Haslet,” Mike Roth, Amazon’s vice president of North American fulfillment, said in a news release. “We appreciate the state and local elected officials who have helped us make this exciting investment in the state of Texas.”

In April of last year, Amazon struck a deal with Texas Comptroller Susan Combs, calling for the online retailer to bring 2,500 jobs and $200 million in capital investment to the state, and to start collecting tax on sales made to people in Texas. Amazon began collecting the sales tax on July 1.

See here, here, and here for the background. Amazon had announced the Schertz location in November. Barring anything unusual this ought to be the end of the story in Texas, but it remains the case that Amazon and other online retailers should be paying sales taxes on Internet transactions regardless of what deals have been worked out in what states. It also remains the case that the current Congress is never going to fix that, so this is the workaround for now.

How would you pay for extra school security?

Would you be willing to tax yourself for it?

Texas school districts could create special taxing districts to fund more security under a proposal unveiled Tuesday by three Houston-area lawmakers.

The Texas School District Security Act would allow school boards to hold elections on whether sales or property taxes should be raised to fund more security at public schools.

“I believe this proposal is a Texas solution that will save lives without sacrificing our freedoms,” said state Sen. Tommy Williams, R-The Woodlands, who, with Sen. John Whitmire, D-Houston, and State Rep. Dan Huberty, R-Humble, is developing the measure.

The three say they still are drafting the bill, but they outlined a few details at a news conference.

Sens. Williams and Whitmire submitted this op-ed that ran in Sunday’s Chron that gave details of the proposal:

Modeled after current law, which allows municipalities to vote to adopt crime control districts, the legislation would do the following:

Allow individual school districts to vote on dedicated funding for enhanced school security measures.

Allow for a dedicated sales tax (if available under the state cap), or a dedicated property tax specifically for enhanced security based on local school district voters. The revenue generated from a local option School District Security Fund would be separate from all other district funding.

Provide transparency and accountability by requiring school districts to hold public hearings on what is to be included in the Texas School District Security Act. Costs will be spelled out and voters will know the estimated amount of the dedicated property or sales tax to cover those costs before holding an election on the issue. The proposal would include a tax cap.

Require a review and renewal election of the Texas School District Security Act every five years.

A repeal petition would allow a community to abolish the Texas School District Security Act before the next renewal election.

The elected and accountable local school board also would serve as the board of the Texas School District Security Act.

On the one hand, if this is what a community wants to do, I don’t see why they shouldn’t be allowed to do it. I can’t imagine voting for such a thing, but I don’t particularly care if some other school district wants to tax itself for this purpose. I think it’s a dumb idea, but I don’t care to stand in their way of adopting it. On the other hand, there may be legal issues with the idea.

If voters approve special taxing districts to fund more school security in Texas, smaller, property-poor districts could wind up relying more on cheaper webcams and less on police officers.

According to the Equity Center, a group that represents underfunded school districts in Texas, the disparity in school funding – the subject of a lawsuit in Austin – again could play out when it comes to capturing more funds for school security by raising local sales or property taxes.

While three Houston-area lawmakers hammer out the details for such a funding option, the Equity Center took a look at how much security a one-cent property tax hike, hypothetically, could raise for a district.

The results were not surprising. Based on the Equity Center’s analysis of 2013 property tax values, Houston ISD could raise $9.5 million; Fort Bend ISD, about $2.35 million; and San Antonio ISD, $1.17 million.

Not too many police officers can be had for that.

“The wealthier will be able to afford better security,” said Ray Freeman, executive deputy director of the Equity Center.

Raise your hand if any of this surprises you. Perhaps the wealthier districts or schools could get around the inequity issue by raising the money via bake sales and whatnot. But really, if this is something worth having, then it’s something everyone should be able to have, and the way to provide that is for the state to do so. But is this something worth having?

Even wealthier districts may have a tough time selling a tax hike to voters already weary of hearing about half-cent or penny tax hikes every time a new need arises.

“It may be a separate taxing district, but it’s money that comes out of the same (voters’) pocket,” said Clay Robison, spokesman for the Texas State Teachers Association.

Robison likes that lawmakers are looking at something other than arming teachers. The bottom line for his group, however, is the belief that the state is “not paying its fair share” for education. “The state is still passing much of the cost to the local districts,” he said.

In addition to the TSTA, the usual suspects among the right-wing policy enforcers oppose the plan on the grounds that it allows for the possibility of one of them being taxed for something. That may make passing this bill, whenever it gets filed, more of a challenge. But seriously, surely there are better things to spend our money on, aren’t there?

When is a surplus not a surplus?

When any extra money you might have is already accounted for, due to unaddressed needs, accounting shenanigans, and shortsighted cuts.

Some lawmakers and budget experts expect to have as much as $8 billion to $9 billion more in general revenue in this fiscal period, which ends Aug. 31. Some are guessing lower. Combs will give her new revenue estimate on the eve of the legislative session.

The unanticipated tax revenue is on top of some $8.1 billion projected to be in the rainy day fund at the end of this fiscal cycle, plus any revenue growth in the next two-year cycle.

House Speaker Joe Straus, R-San Antonio, said that due to disappointing news from the comptroller in past sessions, “I’m not counting on anything until we get the official update.”

Dale Craymer, president of the business-based Texas Taxpayers and Research Association, said, “The state is heading towards a near-record surplus, but there are claims against that.”

Claims include an estimated $4.7 billion in Medicaid expenses due this year that aren’t accounted for in the budget. In addition, some leaders want to quickly undo an accounting maneuver used to balance the current budget, in which they delayed a $2 billion payment to schools.

Looking ahead, it’s estimated Medicaid will take $7.8 billion more in 2014-15 than was allocated last year.

At the same time, the push to restore education cuts is fierce in light of the improving economic picture. Public education got $5.4 billion less in state money than it would have received under previous funding formulas.

“We’re going to need to fund enrollment growth” in public schools in the next two-year period, at about $2 billion, Straus said. But any additional investment may be complicated by a lawsuit over school funding, since lawmakers who have faced repeated litigation like to wait for cases to work their way up to a Texas Supreme Court ruling, so they can see what they are required to do.

That’s all on top of the need to do something about the state’s long-term water usage, and the fact that we currently have no way to pay for any new transportation projects, not to mention the fact that our tax system is antiquated and inadequate and in need of serious overhaul lest we run into these same problems every two years forever. Even if we figure all this out, we’re still going to wind up spending less than we would have to in order to provide the same level of services before the 2011 budget cuts. So yeah, let’s not talk about having a “surplus”. If we’re very lucky, we’ll have enough to do a not-completely-inadequate job of meeting the most pressing needs, while hoping like hell that the economy continues to improve and that the idiotic politics of Rick Perry don’t sabotage everything.

Don’t write off the University line

Metro certainly hasn’t, judging by what they’re saying.

“Dallas has almost 100 miles of light rail,” Metro board chairman Gilbert Garcia told a business luncheon Tuesday. “Certainly we can get to The Galleria.”

What hasn’t been figured out, yet, is how to pay for the project. Federal money was heavily leveraged to get the North Line and Southeast Line to construction, but Metro is assuming a lot of the costs. And the agency is building the East Line without federal money.

In order to attract more federal funds, Metro will still have to pay up to get the University Line going. With a price tag of $1.3 billion, according to the project’s environmental report, that won’t be easy.

That’s what leaves a lot of opponents to the referendum fearing that it will ultimately doom rail. The overwhelming decision by voters to continue general mobility payments to the cities, they worry, will leave Metro with the money to run what it has, but little else.

I never thought the University line would disappear – it’s too useful, and too necessary, for that – but it was clear it would be delayed. I mean, it’s already delayed, but even if Metro could have gotten the full penny of sales tax revenue, there were and are numerous obstacles in its path for this line. The question is how long will it take before Metro feels it can start pushing forward on this again, and what will the status of the existing obstacles be when that happens. I figure the next time to check on that is after the last of the lines that are currently under construction is finished. By that time, the modified GMP will be in place, Metro’s sales tax projections will hopefully be back to where they were before the economic downturn of 2008, and there will be no other big capital projects out there. In the meantime, it’s good to hear Metro talk like this. See the Metro blog for more on their status, and on a tangential note be sure to see Jeff Balke’s story and slideshow about the construction of the other rail lines. Link via Houston Tomorrow.

Amazon comes to Schertz

Hello, Schertz!

After about six months of negotiations, this city, the Schertz Economic Development Corp. and Guadalupe County have approved about $7.6 million in direct tax incentives to land a $166 million distribution warehouse for Amazon.com.

The 1.26 million-square-foot warehouse, called a fulfillment center, will become the largest facility in Schertz and Guadalupe County, Schertz EDC executive director David Gwin said. It’s expected that the project will create 350 new jobs that will generate about $11 million in annual payroll.

What jobs would pay was not disclosed, but Gwin said that the wage would exceed the minimum standards set by law.

[…]

According to the Amazon Fulfillment website, jobs at Amazon’s fulfillment centers pay about 30 percent more than traditional retail jobs.

As part of a deal with the state comptroller’s office to resolve the e-commerce giant’s past tax liabilities with the state, Amazon pledged to create 2,500 jobs and make $200 million in capital investment in the state. Amazon has been rapidly opening more fulfillment centers around the nation and Canada to increase its same-day delivery capabilities.

Schertz is just north of San Antonio, and used to pair with Selma as two of the biggest speed traps in the state. This is clearly a better way to generate revenue for the town. Hope it works out well for them.

Closing arguments for the Metro referendum

One way or another, this argument will be settled on Tuesday. What happens after that is still anyone’s guess.

The referendum on Tuesday’s ballot asks whether to continue spending some public transit sales tax money on streets and bridges. Opponents have campaigned against it by recasting the question: Should transit money be spent on roads or rail?

“You cannot do rail expansion if this thing passes,” said David Crossley, president of Houston Tomorrow, a nonprofit organization that studies urban issues to inform discussions of growth and the leading voice against the Metro proposition. “We’re not going to do rail expansion ever again.”

Mayor Annise Parker and the chairman she appointed to the Metro board, Gilbert Garcia, insist that passage of the proposition makes rail expansion more likely. One of the stated purposes of the referendum is to allow Metro to pay down debt, freeing up borrowing capacity that could be used on future rail lines. Referendum opponents are wrong when they say its passage will delay rail, Parker said Wednesday.

“Either they believe that the magic tooth fairy in Washington will shower us with federal transit dollars in the midst of a still very difficult budget cycle, or we’re going to have to pay for that next line that we build ourselves,” she said. “If we want to pay for that line ourselves, once again, we’re not creditworthy unless we pay down our debt. So, how is this going to slow down rail?”

Crossley’s answer to that, which you can hear in the interview I did with him, would be that with the full penny of Metro’s sales tax going to the agency it would be able to afford to do a lot more of the work on the University Line by itself. It’s still not enough for all of it, however, and part of Crossley’s solution depends on the city doing some of the road and utility work. The city’s plan for transit corridors already includes whatever preparations are needed for transit in those corridors, but there’s always a question of timing and priority, as well as how constrained the city might be financially if it lost GMP funds. It’s really not clear to me how this would play out under either scenario.

In the final weeks of the campaign, Crossley and other rail supporters have stepped up their campaign, raising what Crossley estimated is $16,000. He has spent it on 280,000 robocalls and on yard signs, bumper stickers and T-shirts.

In a KUHF/KHOU poll late last month, 43 percent of respondents said they favored the referendum to 28 percent against. The question read to respondents stated that the additional money Metro picks up if the proposition passes will go toward buses, shelters and paying off debt “and not on rail,” though the referendum does not specifically state that. Further clouding the results was that 27 percent were undecided.

“The voters are confused,” said Rice University political science professor Robert Stein, who helped administer the poll. “What’s on the ballot doesn’t tell voters enough to figure out what to do.”

One single poll can only tell you so much. I’ve had a pretty good feeling about the bond issues from the beginning, before that KHOU poll suggested they were winning. With the Metro referendum, regardless of what the poll says, I feel it could go either way. From what I’ve seen in email and on Facebook, the Crossley message has been getting through. I just don’t know whether it’s too little, too late, or not.

More back and forth on the Metro referendum

Metro Board Chair Gilbert Garcia explains the referendum for those who say they don’t understand it.

The referendum is as easy as 1-2-3. If approved, it will:

1. Continue the road-building program.

2. Expand Metro’s bus system.

3. Pay down Metro’s short-term debt.

Sure, the mathematics of how the money flows to accomplish these items takes work, but building more roads, improving our bus system and paying down debt are the results of a “FOR” vote. And with no increase in your taxes.

The actual ballot language is pretty simple. Voters will be asked to vote FOR or AGAINST: “The continued dedication of up to 25 percent of METRO’s sales and use tax revenues for street improvements and related projects for the period October 1, 2014, through December 31, 2025, as authorized by law and with no increase in the current rate of METRO’s sales and use tax.”

The question we are being asked is indeed pretty simple. What happens after that question gets answered is where it gets complicated. Former Metro VP for Communications George Smalley makes the case for that answer to be No.

Three of the five new rail lines are about half finished; that’s the good news. But the most important was to be the major east-west trunk line known as University. The University Line, you may recall, became snarled in controversy over whether part of it should run on Richmond Avenue. If voters approve the referendum, the University Line will be shelved for at least 10 years and probably longer.

The loss of this key infrastructure of an inside-the-loop collector-distributor light rail system – and its adjacent spur, the Uptown Line on Post Oak Boulevard – would doom effective mass transit anytime soon. The University and Uptown Lines would connect two major employment centers – Greenway Plaza and the Galleria – with downtown, the Texas Medical Center and multiple universities and neighborhoods. This light rail system is what would enable commuters in Missouri City, for example, to ride a future commuter rail line to the Medical Center and then transfer to light rail to reach their jobs in the Galleria.

What’s more, significant amounts of time and treasure have been spent on preliminary engineering, environmental studies and real estate evaluations for the University Line. It is highly unlikely that any meaningful portion of this work could be salvaged if and when the University Line is resuscitated.

So the harsh reality is that the majority who voted in favor of this light rail system in 2003 may not see it.

I’ve said what I had to say last week. If you forced me to make a guess today, I’d feel pretty confident about the bond issues passing, but I don’t have a good feel for this referendum. The politics of it are totally upside down, and despite Chairman Garcia’s explanation, I am confident that some people will vote against the referendum because they think it will deprive Metro of money, and some people will vote for it because they think it will provide more money for light rail. How big these blocs of misinformed voters are, I have no idea. What do you think?

Interview with County Commissioner Steve Radack

Commissioner Steve Radack

To wrap up my series of interviews relating to the Metro referendum, I spoke to the person with whom Metro Chair Gilbert Garcia brokered the deal on the GMP reauthorization: County Commissioner Steve Radack. Commissioner Radack is a strong advocate of the General Mobility Program and a critic of light rail. I suspect that if you read this blog you’re quite familiar with Commissioner Radack, so we’ll just go straigh to the interview:

Steve Radack MP3

You can still find a list of all interviews I did for this primary cycle, plus other related information, on my 2012 Harris County Primary Elections page and my 2012 Texas Primary Elections page, which I now need to update to include fall candidate information. You can also follow this blog by liking its Facebook page.

Interview with Gilbert Garcia and Christof Spieler

Continuing the discussion of the Metro referendum, today’s interview is with Metro Board Chair Gilbert Garcia, and Board Member Christof Spieler. Garcia originally proposed a referendum that would continue the GMP but freeze revenues for the member entities at 2014 levels, with Metro getting all of the revenue increases above that. After an alternate measure was put forth by the Board that would have reallocated GMP funds in a way that primarily benefited Houston and caused loud complaints from the county and the smaller cities, he brokered a deal to adopt the current ballot language, with the proviso that Metro would get half of the sales tax revenue increase but could not use it on light rail construction. Spieler is a longtime transit advocate who was appointed to the Board along with Garcia by Mayor Parker. He was the only Board member to vote against the substitute ballot language. Here’s the interview:

Garcia Spieler MP3

You can still find a list of all interviews I did for this primary cycle, plus other related information, on my 2012 Harris County Primary Elections page and my 2012 Texas Primary Elections page, which I now need to update to include fall candidate information. You can also follow this blog by liking its Facebook page.

UPDATE: In the interview, Spieler refers to a board meeting “this Friday”. The interview was conducted on September 19, so the meeting in question has already occurred. My apologies for the confusion.

Interview with David Crossley

David Crossley

This week I’m going to take an in depth look at the one contentious referendum on the ballot, the Metro referendum. The purpose and the language of the referendum is whether or not to reauthorize the General Mobility Program, in which Metro turns over 25% of its sales tax revenue to Harris County, the city of Houston, and the smaller member cities, for mobility projects, through the year 2025. There is some question about whether the public will understand what the proposition means, which is partly why I’m doing all this. We begin today with David Crossley, who is one of the leading critics of the referendum. Crossley, the President of the non-profit Houston Tomorrow, believes that voting to defeat the referendum, which will result in the cessation of the GMP and thus provide Metro with the full penny of sales tax receipts, is the only way for Metro to finish building the light rail lines that were promised in the 2003 referendum. Here’s our conversation:

David Crossley MP3

You can still find a list of all interviews I did for this primary cycle, plus other related information, on my 2012 Harris County Primary Elections page and my 2012 Texas Primary Elections page, which I now need to update to include fall candidate information. You can also follow this blog by liking its Facebook page.

It’s usually a bad idea to bet on any kind of overhaul in the Lege

I agree that it’s a sucker’s bet to think that the Lege will try to fix Texas’ tax code in any meaningful way. Nobody likes having to take votes that may later be used as clubs against them in a campaign, and the lobbyists swarm like no other time when someone’s tax break is on the line. But such an overhaul has to happen eventually.

For Rep. Mike Villarreal, a San Antonio Democrat who serves on the House Ways and Means and Appropriations committees, it amounts to financial mismanagement by GOP Gov. Rick Perry and the Republican-dominated Legislature.

“Frankly, when you have a governor who says he will veto anything that even looks like a tax bill – even if it’s a reform of an existing, broken tax – it gives little reason for legislators to devote resources to proposing tax legislation,” Villarreal added.

Not that Villarreal and others haven’t tried.

Former Senate Finance Committee Chairman Steve Ogden, a Bryan Republican who is retiring from the Legislature, last year sought a revamp of the chronically underperforming business tax, warning that local school property taxes would otherwise rise. The business tax was expanded in 2006 to help pay for lower local school property tax rates, but it has fallen short of projections. Ogden also has called the exemption-riddled sales tax system a “rickety” thing.

[…]

Villarreal has pushed to create a special commission to recommend exemptions ripe for elimination. It’s an uphill battle, he said, since tax code reform is “the right thing to do in the long term” but presents little short-term political gain.

“We do not scrub our tax code the way we scrub our budget. Every legislative session we open up the budget. We go line by line down the expenses that we approved in the entire session asking ourselves, ‘Is this working?’ ” he said. “In the tax code you can put an exemption in place and have it never be seen again.”

As I’ve said many times before, nothing will change until the state’s leadership changes. It makes no sense that tax expenditures never get the kind of scrutiny that every other kind of expenditure gets. To use the overworked analogy, it’s like going over your household expenses line by line every month, but never reviewing your investment portfolio to see what’s performing well and what isn’t. Of course, every exemption, exclusion, and loophole in the tax code was put there to benefit some interest group with the power to fiercely defend it, and that makes it a much harder fight. But we can see the consequences of avoiding that fight. Those chickens are going to roost whether we’re ready for them or not.

Will voters understand the Metro referendum?

That’s the question that people on both sides of the issue are asking themselves.

“You have some people who will read it and maybe they don’t like Metro and so they’re going to vote against it, without realizing that by voting against it they’re really going to be damaging the county and the city and everybody else,” County Judge Ed Emmett said earlier this month, after Commissioners Court formally endorsed the referendum. “We need to educate people because it’s a little bit of a convoluted ballot item.”

[…]

If the ballot item fails, Metro would keep all of its sales tax dollars for transit.

That is the outcome Jay Blazek Crossley, of the nonprofit Houston Tomorrow, wants. His group and the Citizens Transportation Coalition have raised about $6,000 of their $10,000 goal, he said, acknowledging the money war is lost. Instead, his group is organizing volunteers to post yard signs, campaign door-to-door and speak about the referendum at house parties.

“We think our job is to reach out to Houstonians, talk about transit, and make people understand that we can have a much better transit future. But yes, a lot of people will vote no just because that’s what people do,” Crossley said, adding that some people also may vote yes – mistakenly thinking they’re supporting transit.

Referendum supporters set the ballot language, he said, so if voters are confused, supporters have themselves to blame.

The referendum language is here. I think it’s pretty straightforward, but you have to know what the General Mobility Fund is to comprehend it. As such, I do believe some people will vote based on a flawed understanding of it. I’m going to do what I can to facilitate a better understanding of the issue by running a series of interviews next week on the referendum and its effects. I hope you’ll find it useful.

Can’t we all just get along?

I have a question about this.

Commissioner Steve Radack has already been heaped with praise from his colleagues for helping broker a deal with Metro chairman Gilbert Garcia and Houston Mayor Annise Parker that replaced an earlier proposal that would have drastically reduced the county’s share of that mobility money.

As the court voted to formally endorse the referendum, Radack got another few rounds of applause.

“I think that you, in representing us in this endeavor, have done a stellar job and I want to commend you for your leadership and your ability to bring about a positive resolution in what could have been a very negative situation,” said Commissioner Jack Cagle.

County Judge Ed Emmett joked that Radack should give an acceptance speech, to which Radack replied it might give him a “bounce,” the tired term reporters keep using when looking at polling data to determine whether the recent political conventions helped the presidential candidates.

Garcia, who spoke before the court in support of the ballot item, also praised Radack for working with him all through a weekend last month to hash out a deal.

“What really changed is when he said, ‘Gilbert, what does Metro really need?’ Not what does Metro want, what do we really need? We rolled up our sleeves and we really looked at it and there were two primary areas, which is to pay down the short-term debt that’s been building over the last couple years, and to expand the bus system and shelters,” Garcia said. “We found a great plan that… brings everyone together.”

Emmett said the situation is a good example of inter-governmental cooperation, noting that it was important for the court to be on record supporting the ballot item

Okay, so this heartwarming little episode demonstrates that it is possible for Steve Radack to not be a jerk and actually work with others in the public interest rather than his own. Is there any reason this can’t be the norm and not a once-in-a-blue-moon exception? All this praise of Radack sounds a lot like what we’d say to a kindergartner who finally learned to not hit his classmates as a first response to any stimulus. I realize that everyone has their own style and that some people succeed through combativeness rather than conciliation, but sheesh.

As for the referendum itself, it’s clear that everyone involved agrees on what is at stake.

Voters will decide on the distribution of the tax already received. If the measure fails, Emmett says the money would go back to Metro, and not to the county and the smaller cities.

Link via Houston Tomorrow, which is their reason for advocating a No vote. In the warm glow of Steve Radack’s cooperativeness, there’s no mention of what Plan B would be for the county and the other entities in the event the referendum fails and they lose their access to this funding, but we already know what’s likely to come in that case: Some new form of revenue sharing that will be called something other than the General Mobility Program, and very likely some meddling by the Legislature. These are some of the questions I’ll be exploring in my upcoming interviews.