Posted on 05/18/2006 6:52:36 PM PDT by Dubya
IRVING — Republican Gov. Rick Perry signed into law today legislation that restructures the state business tax to help pay for public schools and accompanies a major property tax cut.
The measure is a major component of Perry's plan to revamp the way Texas pays for public education before a court-ordered deadline of June 1. The new law will help deliver a record $15.7 billion property tax reduction over three years, Perry said.
"It is the largest of its kind in America and significantly reduces the impact of Robin Hood," he said, referring to a state system that distributes some money from wealthy districts to poorer ones.
The measure is one of five school-finance bills passed during a 29-day special session that adjourned Monday.
"Our entire school finance plan will lead to better schools, a stronger economy and a better future," he said before signing the bill.
The law establishes a $3.4 billion tax expansion for next year and changes the state's business tax so more companies have to pay it.
Perry praised the law as a reliable source of funding for schools and fairer to employers than the previous loophole-ridden franchise tax.
The old tax system allowed businesses with good accountants to avoid paying taxes, meaning other businesses carried an unfair load, school districts struggled and local school property taxes skyrocketed, Perry said.
Assorted business groups, including manufacturers, retailers and service industry companies, endorsed the new business tax.
The legislation levies a tax on 1 percent of a company's gross receipts while retailers would pay at a rate of 0.5 percent. It allows deductions for either the cost of goods or employee benefits such as salary and health care.
Perry said the deductions serve as an incentive by rewarding businesses for offering additional benefits to their employees.
Businesses who hire illegal immigrants couldn't claim those tax deductions and face federal sanctions. However, policing for companies who hire undocumented workers would remain the federal government's responsibility.
Sole proprietors and general partnerships are exempt from the tax, as well as businesses whose gross receipts total $300,000 or less and those whose tax bill is less than $1,000.
Independent gubernatorial candidate Carole Keeton Strayhorn, also the state's chief financial officer, criticized the tax measure. While it requires some 200,000 additional businesses to pay taxes, it doesn't pay for the promised property tax cuts, she said.
The $2,000 teacher pay raise is small, and the property tax relief would vanish quickly, Strayhorn said in a release Thursday.
"This law leaves Texans with a $23 billion hot check," she said. "It is bad public policy, and I will blast it off the books after I am elected governor."
On Thursday, Perry said some of those opposing the plan are trying "to keep from paying their fair share."
Republican Rep. Dan Branch of Highland Park said any problems in the bill can be addressed in the 2007 legislative session because some businesses will have had a chance to analyze its effects by then.
State Rep. Jim Keffer, an Eastland Republican who sponsored the measure, joined Perry for the bill-signing in Brownwood. Then Perry planned to travel around the state holding ceremonial signings of the same bill.
The governor hasn't yet signed any of four other bills in the school finance package, which include a $2,000 across-the-board pay raise for teachers, more teacher performance bonuses and additional money per high school student.
Under the school finance plan, property taxes on the average-priced Texas home would drop by nearly $2,000 over the next three years.
Districts would get to keep nearly a $1 billion more from property taxes by 2008. Also, many districts wouldn't have to pay in some of their tax revenues to the state.
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The business tax bill is HB3.
Well, except for Reagan of course.
He's cute but this bill he just signed ain't.
~mark~ to follow discussion.
I heard about a week and a half ago on a talf radio station in Houston the we can expect Strayhorn to run on a lower tax, cut spending and enforce the boarders platform. 11-06 will be very interesting.
Let's start thinking out of the box here like conservatives. I think a commission comprised of retired CPAs and business executives would be willing to complete non-binding audits and efficiency reviews of school districts free of charge (travel expenses reimbursed) if Gov. Perry showed great leadership and encouraged them to serve.
"And an increase in the sales tax might work, but estimates I saw indicated it would have to go up a full percent. <snip> How is that any different from passing on a business franchise tax to consumers?"
I think many fiscal conservatives who prefer sales tax for school funding view it as a vastly more broadly applied, equitable measure that is impartially set against all taxpayers. The sad truth about HB3 is it specifically targets businesses in the small to medium-sized category that will be hit very hard. These are some of the most productive job creators in the Texas economy. Conservatives should never be the ones perceived to be punishing this group. HB3 is actually drawing in far fewer businesses to shoulder the load than represented by the Gov. and that is punitive.
Furthermore, there is great suspicion among conservatives that the HB3 business tax is vulnerable to tinkering and likely to be customized to the benefit of select groups with deep pockets and the most influential lobbyists. The Democrats will beat us about the head and shoulders when (not if) that happens, and deservedly so.
Since the education establishment would scream about state intrusion over such a suggestion--as would their sycophants in the Democrat party--I'd be all for this, but after the election.
Strayhorn's full of it. She's going to run on "I'll cut taxes less, and find some spending cuts"?
Nobody will believe her. The cuts in the last legislative session were brutal, equaling nearly 2 or 3 billion dollars. What else is she going to cut?
Keep school funding local. Keep the State and Federal meddling hands out of it. Don't like your school's level of funding - move.
The judiciary has stampeded the RINO legislature into bad law over an artificial deadline, which we will end up paying through the nose for a long time.
Meanwhile the Texas economy is going to start looking a lot like California - a paradise for the rich and entitled class "poor" with a lot of pain for the middle class.
My school district did the same. Constructed a 21 million dollar stadium including large screen instant replay on LCD that would rival professional sports. Absolutely amazing considering school districts financial whining.
http://www.schooldesigns.com/ResultsDetail.asp?id=1727
There's more than one layer to the new tax, too. I'm not a lawyer, but, as I understand it (admittedly, some of this is from the perspective of the Medical Association and Academy of Family Physcians lobbyists I've talked to):
Those docs who would never take Medicaid or Medicare will find themselves suddenly begging for this tax break.
Finally, the State Legislature has acknowledged that we lose money on Medicaid and Medicare patients.
Big corporations are going to have much greater incentive to move their corporate headquarters to Texas.
All corporations, Professional Associations, LLP's, and all those other business models that enjoy some "limited liability" from the State will have added incentive to provide health insurance and other benefits for their employees, while not having any sort of mandate.
Professional Associations, which are corporations for sole proprieters such as docs, will have better tax relief for health insurance, retirement, etc.
Survey USA currently has Rick Perry's approval ratings at:
40% Like
54% Dislike
Perry is lucky that the opposition against him so divided.
True but my short post did not detail the structure. Every Limited partnership has a general partner usually a corporation with minimal ownership.
Homeowners are not taxed a 95% of value. Much less
I beg to differ. Consider yourself lucky if you get away with less than 95% of true value. Harris County has modernized the entire appraisal process. You would be amazed when protesting the value the information they acquired ie: satellite images and voice recording.
How old is that survey? Getting this through the legislature is going to help Perry.
The survey was released yesterday.
http://www.surveyusa.com/50State2006/50StateGov060518State.htm
You have no solutions to the Texas school funding plan. You oppose Perry because of the Trans Texas Corridor, and you're piggy-backing on that.
Did you know that the Texas Supreme Court put a June 1 deadline on the state to come up with a constitutional school funding plan, or the Supremes would do it themselves?
You're just as clueless as the person you'll likely vote for, which would be any of the other three candidates for governor.
Cowardice is not a political virtue, Bobby. You can't do anything but gripe.
>>>>"Perry is lucky that the opposition against him so divided'<<<<
Hair Club for Men is his only opposition.
TT
After reading that I broke out with hives, I itch everywhere.
TT
I've reported quite a few businesses to www.wehirealiens.com.
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