What's new . . .
The Select Committee on Workers' Compensation was recently created by Lieutenant Governor Dewhurst. I am honored to have been appointed to this committee. Among other topics, the Select Committee will examine the medical fee structure for compensating physicians, patient access to quality care, concerns about over-utilization of the system, and the medical review process. The workers' compensation system underwent a major overhaul in 2001 and changes were made to correct certain abuses. However, as many of you are aware, flaws in the workers' compensation system have been the subject of recent local television news reports and the system is once again in serious need of reform. I look forward to serving on this committee and working to revamp our current workers' compensation system to provide adequate protection for our truly injured workers, their employers, and the healthcare providers who serve them.
Focus . . .
Funding of Current Public School System
I am often asked how the current public school system is funded. For the 2002-2003 biennium (2001-2002 and 2002-2003 school years), total K-12 public education expenditures were $56.9 billion. This amount was funded 38% from state taxes, 53% from local property taxes, and 9% from federal funds. It has long been my position that state taxes should be supporting closer to 60% and local property taxes 40%.
The special school finance committees have been studying the current tax structure to determine what changes might be made to enable the state to increase its share of public education funding. Following is summary information presented to the committees on the major sources of current state and local tax revenues. (SOURCE: FISCAL SIZE-UP 2004-05 BY THE LEGISLATIVE BUDGET BOARD)
Major Sources of State Revenue in Fiscal Year 2003 (9/1/02-8/31/03)
- Sales tax: $14.3 billion
- Corporate franchise tax: $1.7 billion
- Motor fuels tax: $2.7 billion (3/4 of which goes to the Highway Fund; 1/4 to education)
- Natural gas and oil production taxes: $1.5 billion
- Alcohol and tobacco taxes: $1.2 billion
- Insurance tax: $1.2 billion
- Utility tax: $0.3 billion
- Lottery proceeds (net proceeds): $0.9 billion (all of which goes to education)
- Available School Fund (interest, etc.): $0.8 billion
- "Recapture" funds: $1.0 billion (this is included in the $15.8 billion figure below, as it is all property tax)
Major Sources of Local Revenue in Fiscal Year 2003:
- Property tax: $15.8 billion
- Earned interest
- Co-curricular activities fees
- Tuition
In a July 2003 hearing of the House Select Committee on Public School Finance testimony was presented by the Comptroller of Public Accounts that outlined how much illustrative changes in current tax rates for certain revenue sources would raise in new revenue. The following information was prepared for informational purposes only - specific proposals for such changes have NOT been made.
EXISTING REVENUE SOURCES
SOURCE: COMPTROLLER OF PUBLIC ACCOUNTS
| Current Revenue Sources & Current Tax Rates |
Illustrative Tax Rate
Change Increase |
Resulting Added Revenue*
(in millions) |
| Sales & Use Tax (existing base) 6.25% |
1.00% |
$1,923 |
| Hotel Occupancy Tax 6.00% |
1.00% |
$40 |
| Franchise Tax 4.5% of earned surplus or 0.25% of capital |
1.00% of earned surplus |
$383 |
| Oil Production Tax 4.60% |
1.00% |
$57 |
| Natural Gas Tax 7.50% |
1.00% |
$89 |
| Motor Vehicle Sales & Use Taxes 6.25% |
1.00% |
$393 |
| Motor Vehicle Rental Taxes 10.00% |
1.00% |
$14 |
| Motor Fuels Taxes |
| Gasoline 20 cents/gallon |
5 cents |
$556 |
| Diesel Fuel 20 cents/gallon |
5 cents |
$144 |
| Liquefied Gas 15 cents/gallon |
5 cents |
$1 |
| Cigarette Tax 41 cents/pack of 20 |
100 cents/pack |
$854 |
| Alcoholic Beverage Taxes |
| Mixed Beverage 14% of gross receipts |
1.00% |
$26 |
| Beer 19.4 cents/gallon |
$1/gallon |
$374 |
| |
$2.21/gallon |
$628 |
| Wine (table wine under 14% alcohol) 20.4 cents/gallon |
$1/gallon |
$28 |
| |
$2.20/gallon |
$55 |
| Utility Taxes |
| Public Utility Gross Receipts Assessment 1/6th of 1% of gross receipts |
Double Rate |
$45 |
| Gas, Electric & Water Utility Up to 1.997% of gross receipts |
Double Rate |
$266 |
| Gas Utility Pipeline 0.5% of gross income |
Double Rate |
$5 |
| Insurance Premium Taxes 1.6/1.75/1.35/4.85% |
0.10% |
$65 |
*Ignores any timing of implementation and assumes a theoretical fiscal year 2005.
In future months, I will summarize the information presented to the committees on sources of possible revenue, sales tax exemptions, and services excluded from the sales tax base. The reader should keep in mind that reducing local property taxes as the primary source of funding for public education will naturally require raising revenue from other sources to simply replace it at the current funding level. Collecting tax revenue from sources statewide could provide for a more equitable solution to funding public education as opposed to the current "Robin Hood" system of redistributing locally-collected property taxes. Raising taxes to increase funding for public education over the current amount is another question completely.
Did you know . . .
As of January 1, 2004, 25 new laws went into effect. Of these new laws, there are seven that are particularly noteworthy. These seven range from abortion to college tuition to credit scoring. For more information on the bills listed below you may access them by going to the following website: www.capitol.state.tx.us. Then click on the "78th Regular Session - 2003," enter the bill number (listed below), and click on "Submit."
- HB 15 New regulations requiring pregnant women to wait 24 hours before obtaining an abortion. Also requires doctors to supply women with materials, including color pictures of fetuses, and information about pregnancy and adoption agencies.
- HB 3015 For the first time the boards of public universities will have the responsibility for setting tuition. Previously, the Texas Legislature established the parameters for tuition.
- SB 155 Another new law states that motorists will be barred from driving in dry riverbeds.
- HB 560 A new law is effective that sets guidelines for the removal and storage of vehicles left abandoned in apartment complex parking lots.
- SB 14 A new law streamlining the rules on how insurance companies can use credit scores to determine rates.
- HB 1330 Allowing Texas residents to voluntarily list any pertinent medical information on the back of drivers' licenses if space allows. You can add this information to your existing license or when you renew at www.txdps.state.tx.us or by going in person.
- HB 109 And a new law worth noting deals with sales tax. The new law makes it a crime for a person to abuse the state's manifesto system by obtaining a fraudulent sales tax refund on products that are not exported. The comptroller's office estimates border communities lose up to $35 million a year in sales taxes to the fraudulent manifesto refunds. In fact, anyone caught trying to obtain a fraudulent refund could be charged with a Class B misdemeanor, punishable by up to 180 days in jail and a $2,000 fine.
In closing I would like to let you know that I have filed for re-election to the Texas Senate for a fourth term from District 16. At the close of the filing period on January 2, I was humbled to find that no one else had filed to run in Senate District 16. I appreciate your trust in me and, with your input and support, eagerly anticipate continuing my service to our community. It is an honor to represent you in the Texas Senate.
John Carona
State Senator - District 16
www.carona.senate.state.tx.us