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Villarreal on HB3

State Rep. Mike Villarreal is a member of the Ways and Means committee, and one of eight Democrats in the House to vote in favor of HB3 on Monday. (A full list of who voted for what can be found at the invaluable Capitol Annex.) I wanted to understand his reasons for supporting HB3, so I called him to talk about it. Here’s an outline of what he told me:

– He believes that HB3, which implements the TTRC business tax plan, fundamentally “heals our broken tax system”. He sees this as an asset that can be used going forward, that puts the state on a firmer financial foundation, and that as such this was something that has to be supported. Getting something like this in place was the key, because once it’s there, it’s generally there forever.

– While HB3 accomplishes some immediate goals for the Republican Party, he sees it as being a long-term benefit for the Democrats. “This allows a future Democratic legislative majority to have a better system to work with to implement its priorities,” he told me. He stresses, though, that this is just the beginning of some much-needed reform.

– He believes that only a Republican-controlled Legislature could have gotten this bill across the finish line, because they were in a position to sell it to their constituencies that would normally oppose it (I dragged out the Nixon-goes-to-China cliche before he could bring it up). He noted the seeming absurdity of Republicans arguing in favor of an increased tax on businesses, while Democrats argued against it. Given this unusual dynamic, he believes it was best to take the long view.

– While he voted against HB2, which limited funds raised from HB3 to property tax cuts only, he believes that without it, there would not have been enough Republican support to pass HB3.

– When I asked about what vehicle there will be to fund schools in the future, he pointed out that all it will take to make any changes in what HB2 set up for the business tax is a simple majority in the Lege. This isn’t a Constitutional amendment, and it isn’t a lock box (though it’s being spun as one by some Republicans). The next Lege will not be bound by this when it writes a budget if it chooses to use funds from the business tax for other purposes. He cited other funds, created by past legislatures for a specific purpose, that are now used for other things. Two examples he named were the Texas Infrastructure Fund, and a fund to help poor people keep their electricity running, both of which now go to general revenue.

– He disagrees with the argument that HB3 will be more burdensome to small businesses than large ones. He said the $400,000 exemption on a firm’s revenues is sufficient to take care of smaller businesses.

– He points out that Scott McCown and Dick Lavine of the Center for Public Policy Priorities testified in committee in support of HB 3; also, the Texas Federation of Teachers has decided not to oppose HB 3. “These groups who are advocates for poor and working class Texans understand HB 3 represents good policy,” he said.

– Finally, he sees what the Senate is doing with their modifications to HB1 – in particular, the teacher pay raise – as a start at making a meaningful investment in our children’s education. He believes the Lege must also restore the cuts in education made during the 2003 legislative session and restore the health care stipend for school employees. He said that while state revenues rise and fall over time, they tend to fall back to a higher point than where they started (this was a point that John Sharp made during the TTRC process as well), and that with the new business tax in place, revenue growth will be more stable over time.

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2 Comments

  1. kevin whited says:

    While HB3 accomplishes some immediate goals for the Republican Party, he sees it as being a long-term benefit for the Democrats. “This allows a future Democratic legislative majority to have a better system to work with to implement its priorities,” he told me.

    He’s absolutely right, in my view. This is a gift to Texas Dems if it comes to fruition. I have my hopes that Republicans may yet come to their senses. Surely they don’t really want to commit political suicide (so far as the grassroots are concerned) because Rick Perry thinks it will boost his election chances in November.

  2. PinkDome says:

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