Tuesday, May 16, 2006

Sine Die, Sad Day

Oh how 29 days flies when you read fiscal markers and map strategy. Yesterday the legislature wrapped a 30-day call with 24 hours to spare.

Some are hailing Sine Die as an accomplishment of bipartisan cooperation. Others, point to a $10.5 Billion deficit already in place for 2008.

April 17th marks the date that Warren Chisum filed his self proclaimed "get out of dodge bill" that would buy down property taxes with the unused education funds and appease the Supreme Court until the January regular session. The original fiscal note of the bill is about $2.4 billion for the next two years. Once the legislation was enrolled and sent to the Governor’s desk, the two-year marker was estimated at nearly $4 billion dollars.

In 29 days the fiscal marker jumped nearly 100% to buy down property taxes, and this is were the argument of the tax cut comes in.

Three days later, Speaker Tom Craddick institutes a rule vote that will require the House to ignore education funding and forces the focus entirely on property tax reduction. With this rule in place, tax hawks, teachers groups, and education supporters are playing with an uneven deck.

This rule vote made HB 2 increasingly likely to pass and forces all revenues to go to property tax. The shell game starts.

HB 2 mandates that the tax on your car, your tobacco products, and the increased tax on businesses that do not own their property, will all be shuffled over to HB 1. All the low hanging fruit taxes are gone. In order to ensure the property tax level is reached in HB 1 groups are suggesting that a sales tax will be inevitable in the 2007 session, and this will still only resolve the property tax issue and not the education issue.

HB3 and the franchise tax is the most interesting piece of the “tax legislation”. It created an interesting windfall for large corporations. Your apartment complex owners, strip mall owners, and mega corporations like Exxon-Mobil will get tax breaks. In 2007, Utilities will see a net tax break of $90.4 million, Insurance/Finance/Real Estate will get $227.5 million, and Manufacturing will see $114.6 million. This is close tot eh $400 million originally budgeted for education.

In the wave of record-breaking profits, I am glad the state found some time to give them tax cuts.

On the other hand, your local dry cleaner, family restaurant, farmers market, or corner store will be paying the same rent while their landowner is paying less.

The worst part is that in 2007 HB 3 will lose about $2 million and in 2008 it will net about $3.3 billion-- $700 million less than the fiscal note on HB1.

HB 4 and 5 are merely attempts to find $700 million somewhere. HB 4’s enrolled fiscal note (liar’s affidavit) is only $30 million and HB 5 (tobacco tax) is only $432 million.

Even the House estimates do not match up to the most conservative estimates in HB1. There is already a gap between the tax increase and the property reduction.

This November legislators will campaign on property tax reduction and legislative success, but they have put the burden on the next session and the future of the state. We don’t have extra cash lying around now, and we have a commitment to buy down property taxes to a $1.

Yes it is true that property owners will see a reduction in their property taxes, but business (especially small and family firms) are getting hit with one of the largest tax increases in history. If you plan on selling your car and grabbing a pack of smokes, I hope you own your house or you just paying for someone else to get a tax break.

ITPT has the articles to what the largest papers in the state are saying, but the legislature took the easy way out now for a much harder road tomorrow.


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