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July 8, 2005     (512) 463-0300

Lt. Gov. David Dewhurst and Senator Steve Ogden
Lieutenant Governor David Dewhurst (left) and Bryan Senator Steve Ogden outline the Senate's plan for reforming public school finance at a press conference Friday.

FINANCE COMMITTEE APPROVES TAX REFORM PACKAGE

Late last night, the Senate Finance committee passed out the Senate's version of the plan to reform public school finance and lower local property taxes. The Committee Substitute to House Bill 3, sponsored by Finance Chair Steve Ogden, is very similar to the bill passed out of the Senate in May during the regular session, with a few notable differences.

CSHB 3 still relies on a broadening of the business tax to cover the revenue lost through a 40 cent per $100 reduction in school property taxes, as well as a half-cent increase in the state sales tax. The bill would also raise taxes on alcohol, tobacco, motor vehicle sales and repair. This version of the Senate plan, however, includes provisions for a non-binding state-wide referendum which would allow the voters to weigh in on the proposed property tax reduction and franchise tax expansion.

One key difference between the House and Senate plans is the size of the sales tax increase. This issue was at the heart of the disagreement between the chambers at the end of the regular session, leading to the death of the school finance plan and eventually to this current called session. Again, the House plan includes a one cent increase in the state sales tax, while the Senate increases the tax by a half-cent. Ogden said today that he does not think that more than a half cent increase is necessary, if the state would broaden the franchise tax. "I'm very, very comfortable with a half-cent sales tax increase," said Ogden. "I'm very uncomfortable with going above that. I think to say that we cannot reform the business tax in Texas, we cannot broaden the base and lower the rate, all we can do is raise the sales tax to the highest in the nation is bad public policy, and I will not go for that."

The Senate is slated to take up CSHB 3 on the floor starting at 2 p.m. on Sunday, July 10, and if it passes, the bill will then head to conference committee.

Two bills intended to supplement the state's education budget passed the Senate today. SB 5, by Ogden, would provide a one-time billion dollar bonus to state coffers by moving tobacco settlement money within the treasury. It would also give the Office of Attorney General authority to collect delinquent state taxes, and would permit the office to hire private contractors for the job. SB 6, also by Ogden, would reinstitute the education appropriations vetoed by Governor Rick Perry last month. It would direct $295 million toward new textbook purchases, and would increase the instructional facilities allotment to $75 million.

The Senate will reconvene Sunday, July 10, at 2 p.m.

Session video and all other webcast recordings can be accessed from the Senate website's audio and video archive pages.

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