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.
Chicago huh.. very interesting. Too bad we are getting such horrible choices in the voting booths these days.
Ain't that the truth? I am thankful to have John Cornyn as mine. Does anyone in your neck of the woods believe that McCain will be the GOP nominee in 08?
Only to laugh about his aspirations. I think his failure to defeat our Prop 200 last year took a lot of his so-called political capital when he passed by over 60%. He had made one of his rare visits to the state to try and defeat it.
Sounds like an anarchist solution.
We wouldn't have a third of the problems we have now if we had a better education system and people of adult age right now were educated rather than passed a test.
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