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April 8, 2011 (512) 463-0300

WEEK IN REVIEW

BUDGET PROBLEM STRUCTURAL, SAYS FINANCE CHAIR

(AUSTIN) — Budget cuts and appropriation shifts won't solve the Texas budget crisis, Finance Committee Chair Senator Steve Ogden said this week. The Senate's chief budget writer believes that the problem lies in a gap between revenue and obligations, one that must be addressed. Ogden said the biggest reason for the current budget shortfall is the state tax on gross receipts, passed in 2006 to allow for a one-third reduction in property taxes, is underperforming by about $4 billion per biennium.

When the Legislature approved the new business tax five years ago, each dollar of the new tax was to cover lost revenue from a reduction in property taxes from $1.50 per $100 valuation to one dollar. But that tax isn't bringing in enough money, and combined with the national recession, that leaves the budget billions short. Ogden said lawmakers should look at tweaking the law to bring in more revenue. He suggested one solution: moving back to the old state franchise tax, expanded to include more businesses to keep the rate as low as possible. Ogden doesn't believe the Legislature made a mistake in passing the margins tax in 2006. "But it's making a mistake not to adjust it when it's clear it needs adjustment," he said.

In committee action this week, the Senate Government Organization Committee looked at two bills that would introduce dramatic changes to two large state agencies. These measures are a result of the Sunset process, where state agencies undergo periodic reviews to ensure the agencies are efficient, organized, and effective. The first bill considered dealt with the Texas Department of Transportation. During the interim, the Sunset Commission, which is composed of Senate, House, and public members, recommended that TxDoT move from its current five-member governing board to a single commissioner. The recommendation was adopted on a split vote, with all Senate members voting against the recommendation. Monday in committee, Senators voted to amend out the change from five commissioners to one, intending to preserve the current governing structure, one that they believe best represents the diverse regions of the state. "A five member board really gives you more diversity as you spread out appointments around the state. We are a pretty large state with many different regions," said bill author Senator Juan "Chuy" Hinojosa of McAllen.

Other changes to TxDoT adopted by the committee include increased transparency measures, requiring the agency to develop a long-term transportation plan and keep the Legislature and public apprised of the progress and costs of all projects.

Another bill considered by the Government Organization committee on Tuesday would combine two agencies tasked with dealing with juvenile offenders into one agency. The bill would create the Texas Juvenile Justice Department, formed from the Texas Youth Commission and Juvenile Probation Commission. The new agency would emphasize probation and treatment over incarceration, reducing the need for state juvenile facilities. TYC currently has ten state facilities, housing about 1400 juvenile offenders. The bill considered Tuesday would permit small counties, those with a population of less than 100,000, to take control of any closed facilities within their borders for repurposing.

Both bills now head to the full Senate for consideration.

Wednesday, the Senate Business and Commerce Committee considered a series of bills aimed at reforming the state agency that provides windstorm insurance to Texans living on the coast. The bills seek to increase transparency and accountability at the Texas Windstorm Insurance Agency and provide policy holders with an appeals process to challenge claims. These bills will likely be combined into one measure as the committee comes to a consensus on what changes need to be made at TWIA. These bills remain pending before the committee.

The Senate will reconvene Monday, April 11 at 1:30 p.m.


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

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