Senator Ellis Press Release

For Immediate Release
June 8, 2011
Contact: Jeremy Warren, 512-463-0113

Ellis, Davis, Lucio File Legislation to Enact Responsible Budget Roadmap

Eliminates $4 billion cuts to Texas schools, reduces deficit carry-over, reforms Rainy Day Fund

(Austin, Texas)— Senators Rodney Ellis (D-Houston), Wendy Davis (D-Fort Worth) and Eddie Lucio, Jr. (D-Brownsville) today filed legislation to enact his Responsible Budget roadmap, which eliminates reckless cuts to Texas schools, generates tens of billions of dollars in revenue to protect Texas families, responsibly invest in our future, and reduces the need for severe budget cuts to education and healthcare, with no new taxes.

"We have another chance to get it right," said Ellis. "These bills help tackle our giant deficit but in a more reasonable and responsible way. They help eliminate the shortfall without the smoke and mirrors, protects our school kids and seniors and provides us firmer financial footing next session. "

The budget framework calls for elimination of costly tax loopholes (SBs 36 & 37), a constitutional amendment to allow a majority vote to tap Rainy Day Fund reserves for education investment (SJR 2, SB 39) to eliminate $4 billion in cuts to Texas school children and, enforces current tax law on all businesses required to pay sales taxes (SB 38), and calls for effective.

The Senators also called for a special Joint House/Senate Oversight Committee to review the business or "margins" tax and make recommendations to the 83rd Legislature. The business, or "margins tax," simply did not raise enough revenue to offset property tax cuts and, according to the Texas Comptroller of Public accounts, will lead to a $10 billion shortfall every two years if we do not fix the tax.

The Roadmap to a More Responsible Budget:

  1. Ends huge giveaways to business, like the early filer tax break. Texas gave retailers a tax break of over $200M last year simply to file their sales tax on time. We gave them another $200M to file them early, and we gave another $65 million to businesses who pay their fuel taxes on time. There shouldn't be such a huge reward for doing what you are supposed to do.

  2. Eliminates the so-called "high cost" natural gas tax loophole. Texas gave away over $7.4 Billion in tax giveaways from 2004-09 to Natural gas producers who already profit in the billions, because their lobbyists have been able to maintain an antiquated definition of "high cost" gas in the code. From new drills established in 2009 alone, we will lose another $7.9B over the next 10 years.

    This 'tax incentive' was created in 1989 to help companies with the costs of drilling high cost wells, which made sense then, but now virtually every new well produced is a so-called 'high cost' well. Mom and Pop producers are not getting this tax break, major oil companies are. One huge oil company saved $113.8 million in FY 2010, while reporting net profits of $4.6 billion. A subsidiary of another of the world's largest oil companies saved $113.2 million.

  3. Uses the Rainy Day Fund to spare cuts our kids, our seniors and our schools. Ellis' SJR 2 allows for a majority vote to tap the Rainy Day Fund for education. The Rainy Day Fund was created for budget challenges exactly like we face today. And, because of rising oil and gas prices, the Rainy Day Fund balance is at least $6.3 billion; and growing. Even if the Texas economy does slow in future years, soaring oil and gas prices virtually guarantee the Rainy Day Fund will continue to grow. For instance, even as the Texas economy slumped, the Rainy Day Fund grew by 40 percent, from $6.7 billion in FY 2008 to $9.4 billion in FY 2012.

  4. Addresses the structural deficit resulting from how the legislature paid for property tax cuts during the 2006 school finance debate. The business, or "margins tax," simply did not raise enough revenue to offset property tax cuts and, according to the Texas Comptroller of Public accounts, will lead to a $10 billion shortfall every two years if we do not fix the tax. More businesses -- not fewer -- need to pay their fair share for Texas schools.

    In 2006, then-Comptroller of Public Accounts Carole Keeton Strayhorn warned the legislature that the swap was completely out of balance. She called it "the largest hot check in Texas history:
    "As the state's chief fiscal officer, it is my responsibility to spell out exactly what the Perry Tax Plan means to our state's fiscal integrity. As you have known since it was made public, your plan simply does not pay for itself. As of this moment, this legislation is a staggering $23 billion short of the funds needed to pay for the promised property tax cuts over the next five years."

"It is far more important for us to get the budget done right than just get it done right now, said Ellis. "We're ready to get to work and to work with the governor and those in charge."

   

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