Wednesday, April 30, 1997
State Senate to scale back property tax reduction
By RICHARD HORN
Staff Writer
The Texas Senate will drastically scale back property tax reduction,
state Sen. Troy Fraser said Tuesday, partly out of concern about
loss of local school control.
"The concern is always unintended consequences, and we're
about to make a major change in the way our schools would operate,"
Fraser said. "I'm hearing concerns from my school people
about local control. That's probably the driving factor."
Fraser, a Horseshoe Bay Republican, is on the 11-member special
Senate committee reviewing a mammoth property-tax reduction bill
the House passed early Saturday.
It calls for a nearly $4 billion tax shift, cutting school
property rates for homeowners but expanding the state sales tax
and franchise tax. It also uses about $1 billion in surplus state
funds.
As a result, the House bill would boost the state share of
education spending from an average of 47 percent to 80 percent.
Several school districts, including Abilene's, have said such
heavy state funding would significantly tie local school boards'
hands.
While state leaders have consistently said local control is
protected by other education laws, Fraser conceded districts'
fear they would be severely limited under the House plan in such
areas as teacher salaries and classroom technology improvements.
"The assumption is if the state gives you 80 percent of
the money they're going to exercise 80 percent of the control,"
Fraser said. "As the House bill is proposed, I think we lose
local control.
"I've got a concern about voting for that without having
enough input from the school districts about what they think will
happen," he said. "I don't think we've had that input
yet."
Fraser said senators also are worried about the House's broad
expansion of the sales tax by removing many exemptions.
True property tax reduction, he said, is paid for by using
the $1 billion state surplus. Any tax cut beyond that, he said,
"is very clearly an exchange - you're basically taking out
of your right pocket and putting it in your left.
"I want to make sure this is a true tax reduction bill,"
he said, "that in the tax relief we're giving, the pain is
worth the gain."
Fraser said he has never been a fan of the state franchise
tax, which currently applies only to corporations and is based
on their capital or their income, whichever is higher. The House
plan relies heavily on expanding the tax to partnerships.
His first preference, he said, would be to do away with such
a tax entirely or reduce it significantly. Failing that, he said,
he would be willing to expand it to certain other businesses,
if only to make it fairer.
"My feeling about taxes is that they should be fair,"
he said, "and one concern with the franchise tax is that
it only taxes corporations, and a lot of businesses are not contributing
their fair share.
"The expansion they're talking about probably gets into
the area of fairness," he said. "If I'm not able to
kill it or decrease the size of it, then I would consider expansion."
Senate leaders said Monday their bill would make several changes
in the House proposal, including:
- Raising about half what the House bill raises in taxes.
- Significantly scaling back the sales tax expansion, which
the House wants placed on such items and services as auto repairs
and vending machine purchases.
- Scaling back the House's proposed increases in cigarette
and alcohol taxes.
- Boosting the state share of education funding but to less
a degree than the House proposes. The Senate plan would work within
the existing school finance structure, said state Sen. Ken Armbrister,
D-Victoria, who chairs the Senate tax committee.
- Restructuring the franchise tax to shield more of a partner's
income from taxation.
Differences between the Senate plan and the House plan would
have to be worked out by negotiators and receive final approval
from both chambers before heading to the governor.
All that must be done by June 2, when the session ends. If
it passes, voters would approve the plan in a constitutional amendment
election in August.
"I'm cautiously optimistic, but we've got a ways to go,"
Fraser said.
The House plan could be in more trouble after an analysis by
the Legislative Budget Board showed it would cause a $2.6 billion
budget shortfall beginning Sept. 1, 1998.
House members said the report is wrong and asked the LBB to
re-evaluate its report.
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Abilene Reporter-News / Texnews / E.W. Scripps Publications
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