Rep. Jim Jackson’s Capitol Report On The Third Called Special Session

[The following is the "Capitol Report" of Rep. Jim Jackson (R-Dallas), TX-HD-115. It is Rep. Jackson's report on the current Special Session. Though published below in its entirety, you may also download a MSWord version (.doc) of the release here.]

On Monday, April 24th, the Texas House of Representatives passed four bills. The following is my position on each bill, how I voted, and why:

H.B. 1 has been referred to as the “get out of Dodge” bill because most believe it produces enough property tax replacement dollars to meet the Supreme Court mandate to give local school districts meaningful discretion.

I voted against H.B. 1 on its 2nd reading (first vote) in the House because I felt it used too little of the $8.2 billion unencumbered and certified revenue available for tax relief. By using only less than $2.4 billion, we are providing a 17-cent property tax buy down this year resulting in a $255 tax reduction on a property valued at $150,000. After a 5% to 10% appraisal increase and a 3 to 6 cent tax rate increase, the savings would fall to about $156 to $207. That is a real tax reduction, but it is so much less than the legislature can and should do. If we were to use $4.8 billion for tax relief, there would still be $3.4 billion in general revenue and $1.6 billion in the so-called “rainy day fund” reserved to spend on education issues and a few other necessary items.

Hopefully, the Senate or a conference committee will do better. The deciding factor that caused me to be one of only five House members to vote “no” was recapture. The bill lets the school districts raise local enhancement revenue by increasing the tax rate 3 cents on a vote of the school board or more by vote of local citizens. This provision in the bill was originally not subject to recapture (Robin Hood), but a floor amendment placed on the bill made the local enhancement funds subject to recapture. That means that Chapter 41 School Districts (wealthy districts) must send the state part of any revenue it raises on a local vote of the school board or voters.

The strange part is that the money does not go to Chapter 42 School Districts (poor districts), but to the Texas Education Agency. An amendment offered by Representative Branch, that I supported, would have increased funding for Chapter 42 Districts while not requiring recapture on a Chapter 41 District’s local enhancement funds. The amendment failed by a vote of 69-74. When the intent of legislation is to keep someone else from benefiting from their own resources without regard for your own gain or loss, it is retribution and not redistribution or equity. If this provision stays in place, one of the districts I represent will lose over 1/3 of the revenue resulting from a locally imposed tax. Some members of the legislature don’t believe their school districts need more money–mine do and they should have the opportunity to locally raise and keep the local enhancement. Considering all provisions of the bill, I don’t believe it was deserving of my support on the first vote. I did vote to send the bill over to the Senate on final passage.

H.B. 2 simply dedicates all future money raised from new taxes in House Bills 3, 4 and 5 to property tax relief. Many, including myself, believe that H.B. 3 will raise much more revenue in the future than the Comptroller is estimating. (Her recent revelation in finding an additional $5.9 billion for the current budget period should be a clue). Since the legislature is telling everyone that these bills are not tax increases, but are tax swaps that evenly net out, this bill will hold us to the truth. Unfortunately, if this passes the Senate and is signed by the Governor, it can be reversed by a simple majority of both Houses of the Legislature and the Governor in the future. A Constitutional Amendment would be the best way to handle it, but it cannot get the necessary support in the legislature at this time. I voted for H.B. 2.

H.B. 3 is the new broad-based business tax. When I was seeking this office, almost everyone I talked to said we needed to replace the franchise tax with a new broad-based tax. This is the House version and it would raise an estimated $3.7 billion in new dollars for property tax relief. Details are available on line or upon request. I voted for H.B. 3.

H.B. 4, commonly called the liar’s affidavit, simply insures that a person who buys a used car subject to taxation, declares a value within 80% of the Blue Book price or furnishes a qualified appraisal. Cars can still be gifted or traded. This bill raises $40 million the first year and 60 million thereafter–or 1/2 cent of property tax relief. I voted for H.B. 4.

H.B. 5 is the tobacco tax. It was originally on Monday’s calendar, but was sent back to committee on a point-of-order and passed the House on Thursday, April 27. It will raise about $800 million a year and furnish about 8 cents in property tax relief. I voted for it.

Other issues missing in the mix are bills for additional funding for education. The Governor has said that he will open the special session call to these issues once the tax and property tax relief is finished. I expect these issues to include teacher pay and additional funding to make the Teacher Retirement Fund actuarially sound. I support these efforts and expect both the House and Senate to act in support of such legislation.

Of course, issues passed by the House go to the Senate and vice versa. Each House can agree, fail to act, or pass legislation on the same subject that is different. If it passes legislation that is amended, the original house can accept the changes or the legislation could go to a conference committee made up of representatives of both houses. I hope the Senate will give more tax relief in H.B. 1 and reverse the recapture provision for local enhancement revenue. Also, that such positive changes will survive the conference committee. The collective goal of all the separate bills considered by the House so far is to reduce property taxes by 1/3 or 50 cents next year. Hopefully, we will use more of the existing revenue to give more tax relief this year and combined with larger revenue than currently estimated from H.B. 3– more than 50 cents tax relief next year and in future years.

For questions or assistance, please contact Rep. Jim Jackson’s office. Capitol - Phone: 512/463-0468; Address: P.O. Box 2910, Austin, Texas 78768-2910; or District - Phone: 972/416-7698; Address: 1120 Metrocrest Drive, Suite 107, Carrollton, Texas 75006.