Senator Carona's Email Update
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November 1, 2010

WHAT'S NEW . . .

• Construction is set to begin on portions of I-635 and I-35 over the next several months. The timeline begins in early 2011, with construction scheduled to be completed by 2016. Visit LBJ Express to learn more about the sections of these roadways that will be affected by the construction.

• The Senate Committee on Business and Commerce held a hearing on October 25 to examine home mortgage servicer practices and competition in electric retail markets. Related information is available on the Committee's blog,

• The Senate Select Committee on Redistricting, of which I am a member, held its fifth hearing on October 21 in Edinburg, Texas. The committee will continue to travel around the state throughout the remainder of the interim. The purpose of these hearings is to gain public input and opinion on how districts are redrawn during the 2011 session of the Legislature. The next hearing will be held on November 4 in San Antonio, followed by a joint hearing with the Texas House of Representatives in Houston on November 20.

• The 2010 Capitol ornament is available at Texas Capitol Gift Shops. Proceeds from the Capitol Gift Shop help support continued Capitol preservation and educational projects.

FOCUS . . . .State Revenue Sources

When the Texas Legislature convenes in regular session, its primary goal is to write a budget to pay for state services. In January, the Comptroller will release her Biennial Revenue Estimate, which will help the Legislature shape the budget for the 2012-13 budget cycle. With talk of a projected budget "shortfall" of anywhere from 10 to 25 billion dollars, there are also discussions about our state tax system. This Email Update focuses on our state revenue system—your tax dollars—to help better understand the state budget process.

chart: estimated revenue collections by source
*Numbers rounded up to nearest hundred million. Based on the Comptroller's 2010-11
Biennial Revenue Estimate, All Funds, Excluding Trust Funds.

Sales and Use Tax (more commonly known simply as the "sales tax") — The sales tax is a tax imposed on retail sales, leases and rentals. The state, under statutory authority, imposes a 6.25% ($0.0625) sales tax. Texas cities, counties, municipalities and special districts have the authority to impose an additional two cent local sales tax as long as the combined total rate is not greater than 8.25%. However, it is important to note that this additional sales tax above 6.25% does not go to the state, but is distributed to the local taxing authority.

Franchise Tax — Although statute refers to the "franchise tax," since 2006 it has been more commonly known as the "margins tax" because the 79th Texas Legislature altered the franchise tax so it would be based on a business' taxable margin, rather than its net worth. These changes were made to make the tax fairer, close loopholes that businesses had used to avoid the tax, and provide state revenue that could be applied to school property tax relief to local taxpayers. Under the current structure, the amount that would have been collected by the franchise tax prior to the 2006 changes is reserved for general revenue, and any additional funds are dedicated to the Property Tax Relief Fund.

Motor Vehicle Sales and Rental Taxes — The price of a motor vehicle is taxed at 6.25%, minus the value of a trade-in. Rental vehicles are taxed at a rate of 10% for rentals fewer than 30 days and 6.25% for rentals exceeding 30 days. Also included in this category is a tax on manufactured housing, which is levied on a rate of 5% of 65% of a manufacturer's selling price.

Motor Fuels Taxes — Texas taxes three different types of fuels: gasoline, diesel and liquefied petroleum gas. Gas and diesel are taxed at a rate of $0.20 on the gallon, while liquefied petroleum gas is taxed at a rate of $0.15 on the gallon. Note that these are fixed amounts and not percentages. Our state constitution dedicates 1/4 of the motor fuels tax to public education. The majority of the remainder of the motor fuels tax collection is dedicated to the purpose of constructing and maintaining public roads.

Other Taxes — This category includes the hotel occupancy tax, cigarette and tobacco tax and taxes on oil and gas production, as well as a variety of other items.

Federal Receipts — Federal income constitutes the largest non-tax revenue in the state. The federal money that comes into the state is usually dedicated to a certain purpose, such as public education, indigent care and public roads. Last session, the state received additional income provided through stimulus funding which helped the Legislature balance the 2010-2011 state budget.

Lottery Proceeds — This category totaled about $3 billion in the 2010-11 biennium. About $1 billion of proceeds is transferred to the Permanent School Fund, and this year, for the first time, the Veterans Commission will receive money generated from a scratch-off game dedicated to the Texas Fund for Veterans Assistance.

Interest and Investment Income — Traditionally, income from the Permanent School Fund results in the greatest amount of interest and investment income to the state. This category also includes interest on investments of other state controlled benefits programs.

Other receipts — This category includes licenses, fees, fines and penalties, land income, settlement of claims and the sale of goods and services.

I hope this has been a helpful overview of major state revenue sources. Some other references you might be interested in checking are the Biennial Revenue Estimate or the Comptroller's website for other related information. Once the Comptroller releases her revenue estimate in January for the upcoming biennium, the 82nd Legislature can begin in earnest to develop the state's next budget - keeping in mind that, fortunately, the Texas Constitution requires a balanced budget, i.e. no deficit spending.

DID YOU KNOW . . . ?

• Texas has taken action to assist homeowners in preventing foreclosure. The goal of the Texas Foreclosure Prevention Task Force is to avert home mortgage foreclosures and reduce the impact of foreclosures on Texas families and communities. The task force has created a Texas Foreclosure Intervention Resource Guide that you or someone you know may find useful.

• Oncor has a new website,, which gives users the opportunity to browse frequently asked questions to help answer any issues or questions they might encounter. If you don't see your question, there is an online submission form.

• The C.C. Young Retirement Community is continuing The Body, Mind & Spirit Lecture Series on November 16 at 7:00pm with "Does Healthcare Reform Mean Better Health for Seniors and Their Loved Ones?" presented by Jeffrey I. Kreisberg, Ph.D. This complimentary event includes valet parking and will be held at The Point, Center for Arts and Education on the C.C. Young Campus, 4847 W. Lawther Drive, Dallas. Please R.S.V.P at 214-841-2834 or


Tuesday, November 2, is Election Day. If you did not take advantage of early voting opportunities, please take a few minutes of your day to go by your regular polling place and cast your vote. From the Governor's race at the top to our local government races at the bottom of your ballot, your vote is very important. Thank you for taking part in this great experience we call democracy.


John Carona
State Senator - District 16

Capitol Office District Offices
P.O. Box 12068
Austin, TX 78711
512-463-3135 (fax)
8080 N. Central Expy.
Suite 1440, LB 44
Dallas, TX 75206
214-378-5739 (fax)
5401 N. Central Expy.
Suite 300
Dallas, TX 75205
214-953-1886 (fax)