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Income tax, local property tax, business tax (bad idea), sales tax.



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HoustonChronicle.com -- http://www.HoustonChronicle.com 
<http://www.chron.com> | Section: Local & State 
<http://www.chron.com/metro>


/Sept. 16, 2004, 11:55PM/


   Craddick: Business tax 'only' solution


     Speaker says everyone should pay for schools

*By JANET ELLIOTT*
*Copyright 2004 Houston Chronicle Austin Bureau*

AUSTIN - Texas House Speaker Tom Craddick said Thursday that a 
broad-based business tax is the "only solution" for ending the burden on 
local property taxpayers for funding public schools.

ADVERTISEMENT

"I really believe we've got to find a broad-based business tax in this 
state, across-the-board that everybody pays," Craddick said during a 
speech to the Texas Farm Bureau.

His remarks came a day after State District Judge John Dietz ruled that 
the state isn't putting sufficient money into education in violation of 
the Texas Constitution.

Dietz gave lawmakers until November 2005 to adopt a constitutional 
finance law and threatened to close schools if they don't.

Craddick said the state might have to raise as much as $9 billion to 
lower property taxes and provide more education funding. He said that 
amount of revenue couldn't be raised solely through higher sales taxes.

The state now is paying for 38 percent of the $30 billion school system, 
with local property taxes making up the rest. Craddick said when the 
current school finance system was set up, the state was going to pay for 
80 percent and 20 percent would be "local enrichment."

But now, with many districts at or near the $1.50 cap on local school 
maintenance and operations taxes, and unable to tax higher, the system 
is "totally broken," said Craddick, R-Midland.

"I also believe that we need to look at where we're spending our dollars 
in education and making sure we're getting every dollar's worth out of 
it," he said. "I don't think we are, and I think we need to look at that."


     Property tax exemptions

Craddick assured the crowd that he would oppose any efforts to eliminate 
property tax exemption for land used in agriculture. Exemptions for 
agriculture, timber and wildlife management take $91 billion worth of 
property off the tax rolls statewide.

Craddick also said that the court ruling might make the House more 
likely to reconsider expanded gambling as a revenue source to replace 
property taxes. In an interview after his speech, Craddick said that 
although a measure to allow video lottery terminals at horse and dog 
tracks failed in the House during last spring's special session, it 
might be revived.

"You're kind of under the gun to get it done and if people see we've got 
a definite plan, it might be (an option now)," he said.


     Seeking funding ideas

Lt. Gov. David Dewhurst has previously expressed support for a new 
business tax to replace an existing franchise tax that most businesses 
don't pay. Dewhurst plans to hold conference calls with senators today 
to get their ideas about school finance.

Gov. Rick Perry has opposed new business taxes, including a 1 percent 
payroll tax proposed by a House committee during the special session.

Kathy Walt, a spokeswoman for Perry, said "everything is back on the 
table," but that the governor would remain skeptical about a new 
business tax.

"The governor has not ruled out generating additional business revenues 
and has in fact recommended closing a loophole in the business franchise 
tax," Walt said. "Bottom line, he's not going to support a tax bill that 
kills job creation because job creation and economic expansion are the 
best way to ensure long-term resources for education."


     Special session up to Perry

Walt said that Perry would be willing to call a special session if he, 
Craddick and Dewhurst could agree on a plan.

Craddick said he thinks that lawmakers will need the rest of the year to 
decide how to address the issue. He and Dewhurst have asked Perry to 
make education funding an emergency issue for the regular session that 
begins in January.

"We've got the election going on between now and November. We could come 
in during November and December and do it if that's what the governor 
wants to do," Craddick said.

Also Thursday, state Rep. Garnet Coleman, D-Houston, called on state 
leaders to drop an appeal of Dietz's ruling and concentrate on finding a 
new way to fund education.

"Why should we waste more taxpayer dollars defending a school finance 
system that the state leadership, both parties in the Legislature, and 
now a state court all agree is broken?" Coleman asked.

janet.elliott AT chron.com <mailto:janet.elliott AT chron.com>

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        Dillard's
        Houston Hot Sauce Festival



HoustonChronicle.com -- http://www.HoustonChronicle.com 
<http://www.chron.com> | Section: Local & State 
<http://www.chron.com/metro>
This article is: 
http://www.chron.com/cs/CDA/ssistory.mpl/metropolitan/2800135 
<http://www.chron.com/cs/CDA/ssistory.mpl/metropolitan/2800135>