TAX REFORM PACKAGE SENT TO GOVERNOR

Today the House concurred in Senate amendments to House Bill 1, sending the bill to the governor's desk. Lawmakers believe this bill, which cuts property taxes by 17 cents per $100 valuation in 2007, will solve the Supreme Court challenge by giving districts meaningful discretion in setting local property tax rates.

In addition to addressing the Supreme Court decision, the bill also contains several provisions to improve the state's public school system. The bill would increase equity for schools while reducing revenue recapture, require improved accountability and transparency, and grant teachers an across-the-board $2000 pay raise.

Lt. Governor David Dewhurst attributed the session's success to three factors: the imminent June 1 deadline set by the Supreme Court to address what it called a de facto statewide property tax, Governor Perry's business tax plan, and the willingness of the House and Senate to work together. Dewhurst added that he felt the product passed by the Legislature this week was unprecedented. "For the first time in the History of the state of Texas we have changed the way we fund our schools," he said. "We've eliminated recapture on the first third of the money going to our schools. I think it's a historic bill."

This bill joins HB 3 and HB 4 on the governor's desk. HB 3 would create a broad-based business tax on gross receipts for businesses that earn more than $300,000 annually. HB 4 eliminates the "liar's affidavit" by requiring used car purchasers to pay 80 percent or more of the blue book value of the car.

The last two components of the five bill tax reform plan, HB 2 and HB 5, await concurrence in the House. HB 5 increases the tax on cigarette packs by one dollar, and HB 2 dedicates the revenues raised by House Bills 3, 4 and 5 to property tax reduction down to $1 per $100. Once the rate reaches $1, Dewhurst said the savings to taxpayers will be historic. " We're providing the largest tax cut in the history of the State. At a dollar tax rate over five years, we're generating over $10 billion tax reduction to the taxpayers of Texas."

The governor opened the call to a number of legislative topics, including bills relating to tuition revenue bonds, hurricane relief efforts, and a bill to prevent demonstrations at funerals. The Legislature will work through the weekend to pass these bills before the special session draws to a close on Tuesday, May 16.

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