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Texas Senate
May 9, 2002
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Health and Human Services Needs Examined by Subcommittee

AUSTIN - The Senate Interim Subcommittee on Health and Human Services Demand is examining what kind and type of social services Texans will need in coming years. Chaired by Senator Judith Zaffirini of Laredo, the subcommittee today looked at case loads, cost projections and waiting lists.

Subcommittee member Senator Eddie Lucio of Brownsville said that along the border with Mexico the demand for health and human services is growing at a rapid rate and that without accurate planning the state will not be able to keep up.

Health and Human Services Commissioner Don Gilbert was the first invited witness. He explained how caseload projections are developed. He reported the calculations are very complex. Regarding Medicaid, for example, the agency is working on figures three years in advance, while having to account for a changing economy. Gilbert noted, "It's not rocket science, it's a lot harder than that."

Mike Leo and Melitta Bustamante of the Legislative Budget Board then testified regarding performance measures and legislative action on waiting lists in Senate Bill 1. Karen Hale from the Texas Department of Mental Health and Mental Retardation (MHMR) joined the group, testifying that there is an increasing demand each year for her agency's services. Senator Lucio asked what the "true" picture of needs for MHMR services in Texas was, not just the number of people on the waiting list. Commissioner Hale said she could get him the answer at a later date.

Jim Hine, commissioner at the Department of Human Services, described improvements his agency has been implementing to better determine which people need to be served. He also said a new case management tracking system has been implemented. Dr. Eduardo Sanchez, Commissioner of the Texas Department of Health, described how his agency helps children who are chronically ill and/or disabled with their special needs. Public testimony followed.

The Senate Interim Subcommittee on Health and Human Services Demand is chaired by Senator Judith Zaffirini of Laredo. Members include senators John Whitmire of Houston, Chris Harris of Arlington, Eddie Lucio of Brownsville, Robert Duncan of Lubbock and Jon Lindsay of Houston. The committee recessed subject to call of the chair, with the next meeting expected to be in June.

Joint Committee Examines New Ways to Finance Public Education

AUSTIN - The Joint Select Committee on Public School Finance met today, May 9th, 2002, to continue revising the existing state tax system, and to consider possible ways to reform it.

Presently, Texas finances its public education through the so-called "Robin Hood system," whereas property-wealthy districts share their tax revenues with property-poor districts. The system does not reach the goal of equal education for all Texas students and it is considered unjust by some districts that see their tax dollars going to other districts. Last month, Lieutenant Governor Bill Ratliff proposed eliminating local school property taxes and replacing them with a simplified statewide property tax. In Ratliff's proposal the state, instead of local district, would receive the tax dollars and then distribute them among local districts.

Today, committee members heard the views on the tax system of three invited witnesses, Economist Ray Perryman, Dick Lavine from the Center for Public Policy Priorities, and John Kennedy from the Texas Taxpayers and Research Association..

Mr. Lavine talked about how our sales taxes do not keep up with the increase in total sales, because a large portion of our sales are non-taxed services. Forty percent of our sales tax dollars come from the sale of goods, and 30 percent from the sale of services. Lavine offered the option of taxing services, except for those provided by physicians, dentists, and childcare. He then referred to property taxes, which amount to 40 percent of all taxes collected in the state. This kind of tax does capture the growth, increasing parallel to economic growth. He agreed with the homestead and agricultural value exceptions, recommending not to change them. Since our state depends so much on property taxes, he advised a better enforcement of sales price disclosures. Thirty-five other states demand this disclosure, so appraisal districts have a better idea of the value of all properties in order to tax them accordingly.

Mr. Lavine also mentioned the possibility of a state income tax, presenting the state of Kansas as a progressive tax model, with no taxes for incomes below $21,000. The Texas Constitution does not prohibit an income tax or the addition of an amendment to establish it. The option has to be subject to the vote of the people though, in the same way as the Texas lottery was subject to citizens' approval. He said the income tax would not be a panacea, but we are handicapping ourselves by not using all the available tools to increase revenue.

Income tax is a progressive kind of tax --the more income the more taxes paid. On the other hand, sales taxes are considered regressive, since rich and poor pay the same tax. A cut in sales taxes and a new income tax would benefit the poor the most. Based on the Kansas model, 60 percent of Texas families would pay less in taxes, while the richest 20 percent would pay more than they pay now.

Ray Perryman, an economist from Waco, referred to the franchise tax as "the voluntary tax" because of all its loopholes. Perryman offered the option of changing the franchise tax and other taxes for a business activity tax similar to Michigan's. He agreed with other witnesses that if the school finance system remains as it is today, the income of Texas citizens will keep decreasing. The system just doesn't have enough money to appropriately educate a rapidly growing population.

John Kennedy said that no tax system is a perfect tax system. They do a reasonable job in good economic times but they all struggle when the economy is in a downturn. Today, 41 states with different tax systems have budget deficits. Washington, for example, has no income tax and a high sales tax. Oregon, on the other hand, has a very progressive system with no sales tax and the highest income tax in the country. Both states have similar budget deficits.

Committee co-chairs are Senator Teel Bivins and Representative Paul Sadler. Members include Senators Steve Ogden, Florence Shapiro, Eliot Shapleigh, Leticia Van de Putte and Royce West. Also on the committee are Representatives Harold Dutton, Kent Grusendorf, Scott Hochberg, Rene Oliveria and Todd Smith. Public members include Kent Caperton, Will Davis, Craig Foster, Lyndon Olson, Mark Stiles and David Thompson. The committee recessed subject to the call of the chair.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.