Posted on 04/09/2004 4:27:49 AM PDT by Arrowhead1952
Governor says increases relate to voluntary behavior and fairness
By Ken Herman and Michelle M. Martinez
AMERICAN-STATESMAN STAFF
Friday, April 9, 2004
SAN ANTONIO -- Gov. Rick Perry on Thursday proposed a plan he said would allow Texans to smoke, gamble and ogle their way to better schools and lower property taxes.
In addition to increasing levies on cigarettes, adding a $5 tax on admission to topless bars and placing slot machine-like lottery machines at parimutuel tracks, the Perry plan would end a popular tax dodge for many Texas businesses and force many Texans to stop lying about how much they pay for used cars.
It's a fair way to reduce property taxes, said Perry, who once opposed all tax hikes and any expansion of legalized gambling.
"There is a common thread to funding my plan," Perry said at San Antonio's Fox Tech High School. "It derives billions of dollars from voluntary and often unhealthy behavior and also through tax fairness."
The goals of the Perry plan, which will be on the table when he calls lawmakers into special session at an unspecified date this month, are reduced property taxes, more money for public schools and an end to the so-called Robin Hood plan under which property taxes from districts with high property values relative to their student enrollment are shipped to districts that have lower property values.
All residential and business property in Texas is now taxed by local entities working under a cap of $1.50 per $100 of assessed value. Perry wants to cut the cap on residential property to $1.25 and scrap the local property tax on business property in favor of a statewide levy at $1.40 per $100.
The plan calls for a constitutional guarantee that one-third of all future state budget surpluses would be used to reduce the rates, both of which would go down proportionately.
The goal is a 75-cent levy on residential and business property.
"If Texas legislators pass into law my property tax cut, they can reverse a nearly decade's worth of school property tax rate increases with just one vote," Perry said.
The governor acknowledged there is still no consensus among legislative leaders.
House Speaker Tom Craddick, R-Midland, said Perry's plan will get "the consideration, analysis and respect due our state's chief executive."
The problem is not new, Craddick noted.
"We hope to find a solution to this public education funding problem that has eluded our state's leadership since the days of the Republic," Craddick said.
Lt. Gov. David Dewhurst said Perry's plan, as well as others in the pipeline, deserves "careful consideration."
Dewhurst, presiding officer in the Senate that last year approved a sweeping tax overhaul plan that included a broadening of the sales tax base, said he shares Perry's goal of cutting property taxes, ending Robin Hood and providing additional resources for schools.
Perry already has drawn fire from local officials around the state who are unhappy with his call for a 3 percent cap on annual increases in property value assessments. He views that as the best way to make sure that local governments don't make up for lower rates by raising assessments.
The governor's staff said homeowners and business owners would save a collective $3.2 billion in property taxes through 2007.
In exchange, and to boost funds for education, Perry offered a $7.1 billion tax hike package. The biggest chunk, $2.5 billion, would come from an additional $1-per-pack levy on cigarettes that would make the state's tax on cigarettes $1.41 per pack.
Tobacco companies that did not participate in the settlement of state lawsuits against the industry would see an additional levy of 50 cents per pack on their products, producing another $134 million through the next biennium. Those are generally foreign tobacco companies. "If we stop a lot of people from smoking, that's going to be good for the Texas economy," Perry said, noting the cost of treating tobacco-induced diseases.
The American Lung Association of Texas, which has been pushing the $1-per-pack increase for several years, praised Perry's proposal.
"Usually when you increase a cigarette tax, more people stop smoking," said Linda Nichols, the association's chief operating officer. "So you're going to have fewer smokers, so you're going to have healthier Texans."
But Jamie Drogin, a spokeswoman for Philip Morris USA, said the tax hike would bring unintended consequences, including increased Internet purchase of cigarettes, as well as smuggling from nearby states with lower taxes.
"Over the past few years, as many states have risen their excise taxes, what we have seen is a decrease in legitimate sales and an increase in illegal or contraband activity," Drogin said.
She added that tobacco sales are declining 1 percent to 2 percent a year and would not be a reliable source of income for funding public schools.
"What's going to happen to the state of Texas is they're not going to get the funds that they expect, and the second problem is what they are going to see is an increase in illegal activity."
Another section of Perry's plan seeks to capture money now spent illegally on gambling. Two billion dollars would be raised by placing video lottery terminals -- which in many states look just like slot machines -- at the state's horse and dog tracks, as well as American Indian reservations. Perry also wants lawmakers to consider allowing lottery ticket dispensers at gas pumps, the sale of tickets at bars and the use of credit cards to buy tickets.
Perry, a longtime foe of legalized gambling, said the spread of illegal gambling in the state justifies the spread of legal gambling.
"How many eight-liners are there in San Antonio?" he said, referring to the illegal gambling machines the state has had sporadic success in shutting down. "You have a proliferation of illegal gambling in this state. This is the way to regulate it, to put it in locations where we know where it is."
Perry also said his plan would bring in $714 million through 2007 by rewriting an exemption that allows many businesses to avoid paying the franchise tax, the state's prime business levy, by incorporating in low-tax states, such as Delaware. Cox Texas Newspapers LLP, the American-Statesman's parent company, is structured to take advantage of the exemption.
The plan also would raise $172 million through 2007 by shutting down the system that allows buyers and sellers of used cars to cut the tax hit by lying about the sales price. It would require documentation of the price.
About $90 million through the next biennium would be raised through the proposed $5 tax on admissions to "adult entertainment" venues featuring live entertainment. That proposal did not sit well at the Yellow Rose, an Austin club that would be subject to the new levy.
"I'm not sure why we would be singled out," said Tom West, the club's day manager. "If we have to charge an extra $5 a head to get in here at night, that's gonna to hurt our business considerably."
Several of the proposals would require constitutional amendments that have to be approved by two-thirds of lawmakers and a majority of voters. Perry favors rolling it all into one ballot question.
"I think Texans will look at that and say that is good for our children, that is good for the taxpayers and that is good for job creation in this state," he said.
kherman@statesman.com; 445-1718
mmmartinez@statesman.com; 445-3633
Highlights of school funding plan
* Cut the maximum local school property tax rate by 25 cents immediately for homeowners, capping the rate at $1.25 per $100 in assessed value.
* Create a state business property tax of $1.40 per $100 in assessed value.
* Save property owners $3.2 billion through 2007, according to governor's staff estimates.
* Require a general election to raise the maximum local school property tax rate for the operation of schools.
* Dedicate surplus state funds to further cut the school property tax rate to 75 cents per $100 for homes and businesses.
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In Perry plan, sin would profit schools
Think many wives will but off on a comment like "We are going to Hooters for the children." Bet this plan will get a very cold shoulder by most people.
More taxes on cigarettes, more taxes on (ogling), and more gambling? This will not provide any additional money for education. Remember the Lottery?
It's a fair way to reduce property taxes, said Perry, who once opposed all tax hikes and any expansion of legalized gambling.
If this is true, than stick with it. What ever happened to CUTTING SPENDING?
The plan calls for a constitutional guarantee that one-third of all future state budget surpluses would be used to reduce the rates, both of which would go down proportionately.
WHAT SURPLUSES ?????? Never going to happen. Should we ever have surpluses, give it back to the taxpayer.
The governor acknowledged there is still no consensus among legislative leaders.
What was that hotel in Oklahoma the democrats fled to? Just in case, ROFLOL. I have the solution, and will provide it FREE OF CHARGE.
All I need is a copy of the budget, a few red pens, and a calculator. Will even spring for the pens and calculator.
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