Seal of the Senate of the State of Texas Welcome to the Official Website for the Texas Senate
Seal of the Senate of the State of Texas
Welcome to the official website for the
Texas Senate
May 1, 2006
(512) 463-0300


The Senate today gave preliminary approval to three measures that look to shift the burden of public education funding from property tax revenues. House Bills 2, 3, and 4 would amend the state's tax structure and provide that the revenues made from these changes are dedicated to property tax reduction. Lt. Governor David Dewhurst congratulated the Senate for moving these bills through the process. "We moved the ball forward in providing substantial local school property tax reduction for the taxpayers here in Texas," he said.

HB 3 would provide for the greatest change in the tax structure through the creation of a margins tax that would tax the gross receipts of any business that earns more than $300,000 per year at one percent. Retail businesses would pay a reduced rate at one-half percent. HB 4 would require used-car buyers to pay sales tax on the "blue book" value of the car. HB 2 would mandate that all revenues garnered through these changes, as well as the revenues from HB 5, which is still in the Finance Committee, would be dedicated to reducing the property tax rate down to $1 per $100 valuation. Once this threshold is reached, one-third of the new revenues would go directly toward public education, with the remaining two-thirds dedicated to further property tax reduction.

The other components of the tax plan passed by the House this week, HB 1 and HB 5, are still before the Senate Finance Committee. HB 5 would add a $1 tax to the purchase of a pack of cigarettes, and HB 1 would use part of the current budget surplus to buy down the property tax rate by 17 cents. The Committee added provisions to HB 1 for improving the quality of schools in Texas. The bill as amended would increase teacher pay, provide financial incentives to teachers who go to hard-to-staff schools, and increase financial and academic accountability. Committee Chairman Steve Ogden said today that he would like to vote HB 1 out of committee on Tuesday.

HB 2, HB 3, and HB 4 will face a vote for final passage on the Senate floor Tuesday, beginning at 11 a.m.

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