The Chamber of Commerce tax cut

I mentioned before that a secondary reason for Governor Perry to veto HB770 and its Wayne Christian Beach House provision was an amendment slipped in by State Sen. Mike Jackson to give a property tax exemption to local chambers of commerce. Ed Sills of the Texas AFL-CIO went off on a righteous rant about this in his email newsletter the other day, and I wanted to reproduce it here. With his permission, it’s beneath the fold, so click on to read it.

Gov. Rick Perry’s list of 35 vetoes probably walks more lightly than his veto-fests of past legislative sessions, but what he vetoed and didn’t veto may say more about the state’s priorities than ever.

Largely because of Perry’s opposition, the Legislature chose not to accept $555 million in federal economic stimulus dollars to help Texans who have lost their jobs in this bad economy through no fault of their own. Also largely because of Perry’s opposition, the Legislature could not pass a bill that would have expanded the Children’s Health Insurance Program, which serves working poor families.

The Legislature clearly had solid majorities in each chamber for the two bills. If you have been around the House and Senate long enough, you realize that gubernatorial opposition tends to aggravate the kinds of procedural implosions we saw at the end of the regular session that killed the two bills.

Now let’s take a quick peek at one bill that did not fail, HB 770. The original bill by Rep. Donna Howard, D-Austin, was designed to provide some property tax relief for victims of major storms. But a well-publicized provision added late in the legislative session purports to change the state’s Open Beaches Act to allow rebuilding of homes in situations that might not have occurred before, and a prominent beneficiary of that provision is state Rep. Wayne Christian, R-Center.

In a message stating that he would allow the bill to become law without his signature, Perry criticized the Open Beaches alteration, but did not say why he withheld his veto.

Another late amendment to the measure that Perry did not discuss, however, might provide a clue. It provides property tax exemptions to local Chambers of Commerce. The idea was the essence of a bill that had not advanced through the legislative process until it was stuck onto HB 770 at a very late date by Sen. Mike Jackson, R-La Porte.

Now I won’t dispute that Chambers of Commerce can do some good in a community, particularly as an economic development engine. But of all the non-profit entities that might benefit from tax breaks, I’d put the chambers at the bottom of the list in terms of need and in terms of whether exempting them from taxes serves the best interests of Texas. In at least several cities, Chamber of Commerce buildings are multi-million dollar edifices that generate significant property tax revenues and sit on prime real estate.

It should also be noted that Chambers of Commerce, at least in Texas, are also highly politicized organizations. They are power centers of establishment forces. They participate directly in referenda, local government issues and other matters and participate indirectly, though their PACs, in elections. Through the Texas Association of Business, chambers also lobby in Austin — very often on the opposite side of the labor movement — and they have very close ties to this governor.

A couple lawmakers at least waved at the Chamber of Commerce exemption train as it sped by, but no one in either party made a serious effort to stop it. Moreover, it was apparently no accident that while the Texas House leadership was knocking off dozens of Senate amendments to bills because they were not “germane” to the legislation, exempting Chambers of Commerce from property taxes was deemed perfectly “germane” to a bill whose caption clearly specifies victims of storms. Plenty of more popular amendments that had a far more arguable connection to the bills at hand were killed on points of order in the Texas House, but not this one. The fix was in.

So what are we left to conclude? The desire of Chambers of Commerce to avoid paying property taxes is a higher priority than helping unemployed Texans or children from working poor families.

One can take this “warped priority” argument much further, however, in analyzing this legislative session and I’ll provide just an example or three. The Austin American-Statesman noted that one of Perry’s vetoes came on HB 2888, an uncontroversial measure that would have used about $2.6 million in federal funds to support volunteer tax centers that help low-income people fill out their federal tax forms. The hope was that such centers would enable working poor Texans to claim an estimated $1 billion in credits, including the Earned Income Tax Credit, which they leave on the table now.

Perry hurled this irrelevant ideological platitude at the bill in his veto message: “These funds should be used to benefit people, not create more government bureaucracy.” One way to read that sentence is to assume that by “people,” Perry means the Chamber of Commerce and by “government bureaucracy,” he means working poor Texans.

In other words, the desire of Chambers of Commerce to avoid paying property taxes trumps a well-thought-out effort to help working poor families keep more of their federal tax dollars — to the benefit of Texas.

Then there was the veto by Perry of HB 518, a bipartisan measure by Rep. Lois Kolkhorst, R-Brenham, (whose name, by the way, Perry’s office misspells in the link to the veto on his office’s web site) and Sen. Leticia Van de Putte, D-San Antonio. The bill would have provided student loan repayment assistance to correctional officers, as well as math and science teachers and some other job categories. Perry said these workers, who are in jobs deemed to be important to Texas’s future in different ways, have adequate access to existing state financial aid programs.

So expanding educational opportunities for state workers clearly takes a back seat to the desire of Chambers of Commerce to avoid paying property taxes.

Then there’s Perry’s veto of HB 3983 by Rep. Eddie Rodriguez, D-Austin, and Sen. Kirk Watson, D-Austin, a bill on property taxes for low- and middle-income families. Read Perry’s veto message in full to get the full sense of where low- and middle-income families stand in Texas compared to the Chambers of Commerces:

“I am vetoing House Bill No. 3983 because I have serious concerns about language in the bill that requires the comptroller to conduct a study of “circuit breaker” property tax programs used in other states.

“Circuit breaker” programs are designed to provide property tax relief to certain individuals based upon their income. The cost of this type of program is usually borne by the state, while the local governments still receive their full share of the property tax. In some states, renters are also eligible for rebates despite the fact that they do not directly pay the property tax.

These programs have several negative effects. One negative effect is that it breaks the link between what taxpayers pay and what they receive in local services. Under a “circuit breaker,” some taxpayers will effectively pay no tax but receive the same services and amenities as other taxpayers who do not benefit from the program.

Such a program would also have a significant cost to the state, since the purpose of the program is to allow local governments to enjoy the political benefits of a tax break without having to carry the cost. This allows them to avoid tough decisions about the level of taxation that the community can bear and what services the voters want them to provide.

Finally, if such a program were to be adopted in Texas, it would make the distribution of the property tax burden less equitable by shifting it to middle-class property owners. This would make the property tax function more like a progressive income tax, in that the tax burden would slowly be pushed upwards until only the owners of the most valuable property paid any actual tax.

Texas property owners could use additional tax relief, and I have worked hard to ensure that they receive relief; however, any solution must be one that makes all property owners better off. This study would undermine all the efforts made to ensure that the property tax has a low rate, is broad-based and is equitable for all Texans.”

It just doesn’t get clearer than that. In Perry’s view, we want a fair tax system; we just want it to be a little fairer for the Chambers of Commerce. We don’t like “circuit breakers,” but we like blanket exemptions for Chambers of Commerce.

If you want to look at Perry’s other vetoes to get a sense of the level of ideological and political content in just about any of the messages, which seem to have been vetted by campaign officials, go to http://governor.state.tx.us/news/bills/

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2 Responses to The Chamber of Commerce tax cut

  1. Eunice says:

    “The idea was the essence of a bill that had not advanced through the legislative process until it was stuck onto HB 770 at a very late date by Sen. Mike Jackson, R-La Porte.”

    This is not entirely accurate. Although Senator Jackson’s SB 564, did not even get a committee hearing in the Senate, the companion, HB 831 passed the House on May 15th by a vote of 131 Yeas to 4 Nays. HB 831 did die in the Senate, however.

  2. Pingback: The Chamber of Commerce tax cut gets extended – Off the Kuff

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