Tax cuts today equal cruel budget cuts later. That’s the message from 25 groups to The Lege. Here’s the letter from Texas Forward.
Over 25 Groups Warn Legislature Tax Plan Could Cause More School & Health Cuts
Letter Says Huge Tax Cuts Put Children and Families One Economic Slowdown Away from 2011-Style Budget Cuts
Peggy Fikac has more.
The groups recalled billions of dollars worth of cuts to public education and other programs that occurred during tough economic times in 2011, when then-state comptroller Susan Combs issued an erroneously low revenue estimate.
The group said in their letter that they are “concerned that the nearly $5 billion tax cut proposals you are currently considering would place the state on a path to the kind of deep, harmful cuts to basic services that were enacted in 2011…. Texas must be prepared for the natural ups and downs of the economy, particularly today as sales tax growth slows and oil prices remain low.”
Unless the tax cuts are temporary, or the rainy day fund is made available, “the next economic downturn will leave Texas without the revenue necessary to meet the needs of our growing state and risk another round of deep cuts to basic services,” the groups said.
Backers of the tax cuts have said Texas has enough money to meet key priorities while still reducing levies, and that it’s appropriate to return money to taxpayers in relatively flush times.
The groups backing Monday’s letter include the Association of Texas Professional Educators, Austin Voices for Education and Youth, Center for Public Policy Priorities,
Children’s Defense Fund – Texas, Coalition of Texans with Disabilities, Coastal Bend Center for Independent Living, Foundation Communities, Grassroots Leadership
Mexican American Legal Defense and Educational Fund and National Association of Social Workers – Texas Chapter.
Also signing on to the letter are North Texas Job with Justice, Pastors for Texas Children, Rio Grande Valley Equal Voice Network, San Antonio Nonprofit Council, SEIU- Texas, Texans Care for Children, Texas AFL-CIO, Texas AFT, Texas National Nurses Organizing Committee, Texas Organizing Project, Texas Public Interest Research Group, Texas State Employees Union, Texas State Teachers Association, Voices for Children of San Antonio and Workers Defense Project.
Let’s not forget that along with Combs’ bad budget estimate, the last GOP tax scheme, which created a structural deficit, made those cuts harsher as well.
Here’s an analysis from Ross Ramsey on the Texas GOP’s inability to deal with the current budget situation, Analysis: Big Money, Little Ideas in Legislature.
You can make a perfectly reasonable argument for leaving the money alone, which is apparently what’s going to happen during this legislative session. But isn’t it strange that none of those statewide officials and legislators has come up with some fantastic scheme for all that cash? No big dreams? It could be a genuinely big tax cut, a transportation plan, funding for more water projects or public schools, or whatever.
The lack of such a plan is a tiny piece of evidence that none of the people serving in Texas government really wants to write a chapter in the history books. Method, motive and opportunity — all of the elements of crime and government — are present here.
I think he’s wrong. The GOP does have a “fantastic scheme for all that cash“, that at this point seems likely to pass, and will cause Texas huge problems in the future.
The problem the GOP will have in the long run with these tax cuts will far out weigh any success. The tax cut to average, non wealthy, Texans will be negligible at best. While the problems caused because of them will be easy for all to see.
The GOP, as it is currently run in Texas, is incapable of using the current budget conditions to set Texas on a road to long term success. They see government as the problem and cannot fathom a way to use government to help Texans.
Last week the Texas House passed their version of a budget. There’s been quite a bit of ink and bytes spilled on, as Kuff calls it, “..a moment that would be worthy of the Daily Show and the kind of viral mockery”.
But the true derision should be saved for the kind of immoral legislating that the Texas GOP craves. Via the CPPP, Texas House Budget: The Day After.
Lost in the shuffle are the dozens of missed opportunities that lawmakers had to recommend smart investments that would have moved us closer to a Texas where everyone is healthy, well-educated, and financially secure.
Failing to add General Revenue outright – and not just in Article XI – for everything from Pre-K to child protective services means that it’s the people of Texas who will lose out. And it’s clear from early drafts that the Texas Senate’s draft budget will do even less in most areas to invest in Texas’ future.
I was struck by the repeated assertions by House leaders that – as important as some of the proposed amendments were – there was simply not enough money available to fund them. Well, when you reserve billions for unspecified tax cuts, make a half a billion dollars for border security “off limits,” and leave unspent $2 billion of available revenue beneath the arbitrary spending cap, then it’s easy to claim there’s not enough money. And there’s still another $11 billion in the Rainy Day Fund that House leaders are choosing not to invest.
The House budget emerged from the floor debate without accounting for cost increases in health and human services, fully restoring state aid for public education or other things a more responsible budget would do. Tuesday night was a long and sleep-deprived evening for those of us who followed the House budget debate. But it’s the missed opportunities that won’t let us rest easy in the weeks ahead — not as long as there’s still a chance to improve the final outcome.
There is certainly enough money in the budget to take care of the needs of Texans. And, as this report shows, the last thing we need are tax cuts for the wealthy in this state, Who Pays Taxes in Texas?
..households with income less than $34,161 pay almost four times as much in taxes as a percentage of income, than households with income over $147,411. Which means that the Texas households that are least able to afford it pay more in taxes as a percentage of their income, than the Texas households that could easily afford to pay more.
The more you make the less you pay, the less you make the more you pay, that’s the Texas way.
The budget and likely tax cuts will do nothing to change that slogan. Texas will continue to shun Medicaid expansion, only making things worse for those who are not wealthy, no matter the cost to the state and local communities.
Do you know how many local jobs would be created in your county if Texas closed the health care Coverage Gap? It’s easy to find out with our new fact sheets for every county in Texas.
With the support of Methodist Healthcare Ministries of South Texas, we’ve created customized fact sheets that outline the economic and health benefits for county residents if Texas accepts federal funds to expand health care coverage.
In Harris County, for example, expanded health care coverage would create 60,000 new jobs per year and pump up to $935 million into the county economy. Data come from recent estimates by respected Texas and national experts, including the U.S. Census, economist Dr. Ray Perryman and former Texas Deputy Comptroller Billy Hamilton.
In Williamson County that would be 1,985 jobs, pump $76 million into the local economy, and cover 12,000 residents.
These numbers need to be pointed out. Not to shame our current elected leaders – that’s not possible – but to inform the public that there is an alternative.
This little nugget is tucked into SJR 1, the constitutional amendment for the Senate’s property tax cut bill.
and prohibiting the imposition or collection of a tax on the conveyance, including by sale, lease, or other transfer, of an interest in real property.
A constitutional amendment prohibiting a sales tax on real estate transactions.
Last week Ross Ramsey told us what was going to happen, Killing a Tax Without Saving Taxpayers a Dime.
Careful readers will find an Easter egg tucked in one of the tax measures approved by a Senate committee this week — a mostly unmentioned clause that would constitutionally ban taxes on real estate transactions.
Don’t count your savings: Texas doesn’t even have a tax on real estate transactions.
Texas is one of the 13 states without a tax on real estate transactions; a constitutional ban would prevent future lawmakers from imposing one without voter approval.
It would make your friendly neighborhood Realtor happy, however. And it is especially delicious for the Texas Association of Realtors, the trade association for real estate agents and a wealthy and generous donor to political campaigns. For this industry, any talk of taxing home and building sales, leases and other transactions is a cardinal threat.
Not a bad idea to get all the real estate agents on your side when you’re trying to pass a property tax swap scheme that will have little effect on most homeowners.
The reason this is interesting is because last week many in the Texas business community pushed back on the Senate’s tax plan, Business groups say tax plan needs to make state needs priority.
Major business groups pushed back Friday against a multibillion-dollar package of tax cuts advancing in the Texas Senate, calling it inequitable and saying state needs should be funded before lawmakers consider tax relief.
The criticism highlights how, despite support for tax cuts among Republican legislative leaders, details are far from settled and are prompting dissension among lawmakers and businesses.
It also echoes concerns from some leading lawmakers that the emphasis on tax cuts could imperil efforts to address such issues, as education, transportation, state debt and pension programs.
And this week those in the real estate business in Texas pushed back on them.
Well-funded and vocal opposition to these measures show little regard for homeowners who are crippled under our current property tax system. Or for any business, especially small businesses, who are working within a tax system that stifles business expansion and economic opportunities.
Furthermore, in objecting to these tax relief measures the opposition boldly state lawmakers should protect infrastructure and special interests needs first: “If there is any money left over, it is appropriate to consider tax relief.”
While we support long-term infrastructure needs in Texas, we feel it is time to put home owners and business interests at the forefront of any public policy debate and not as a trickle down afterthought.
Didn’t see that coming. Pretty soon, if we aren’t careful, all taxes will be constitutionally banned in Texas. Which has been the plan all along.
Christopher Hooks does a good job of describing the wacky tax proposals of the new GOP Lt. Gov., Dan Patrick’s Inexplicable & Contradictory Budget Proposals.
Last week Lt. Gov. Dan Patrick did something pretty surprising: He held a press conference with a Democrat and the most moderate Republican left in the Senate, Kevin Eltife of Tyler, to put his stamp of approval on a proposal that would allow the Legislature to use revenue beyond the “spending cap” for tax cuts and debt repayment. The spending cap, a constitutionally enshrined limit on the amount the state budget can grow from biennium to biennium, has been a sacred cow for conservatives for many years. Here was Patrick, elected as a budget hawk, threatening to can the cap while pretending to do the opposite.
This session, budget-writers thinks there’s about $6 billion in revenue above the spending cap, but unless they take a majority vote to lift the cap, they can’t use it. Patrick wanted to bust the cap so he could get his hands on that $6 billion to pay for his beloved tax cuts, and this was a way of squaring the circle. Senate conservatives were mostly silent on the move, but it was loudly panned by commentators like Texas Monthly’s Erica Grieder, who pointed out that Patrick made a name for himself in the Senate in part as a loud opponent of an imaginary legislative spending spree in 2013, but now was looking for a way to bust the spending cap for the sake of political convenience.
But that was last week: Each week of the 84th Legislature brings to us a New Dan, and a New Day for Texas. Today, Patrick took to the same podium with some of the Senate’s most conservative members with a proposal to greatly tighten the spending cap, restricting even further the amount of revenue future legislators will have access to.
What the hell?
If it’s true, as R.G. Ratcliffe says, that “..homeowners believe their property taxes are unfair”, there’s an easy way to fix that. One of the most fair taxes ever invented is sitting in dry dock. And implementing it would automatically reduce property taxes significantly and make taxes more fair. Therefore lower taxes on most low, working, and middle class Texans and their families.
Of course it’s a state income tax. And isn’t likely to happen anytime soon. It’s something Democrats should champion. Until a state income tax is enacted these scams and schemes, with politicians twisting themselves in knots, attempting to find a solution, will continue.
The GOP is in a bind, so they want to change the rules in the middle of the game. This goes good with the temper tantrum they thew on Medicaid expansion earlier in the week.
Erica Grieder in the Texas Monthly uses way too many words to explain, in a nice way, that the Texas GOP is scheming to change the budget rules on debt and taxes. The GOP wants to bust the spending cap, without having to pay, politically, for busting the spending cap.
Since former Gov. Rick Perry’s tax diversion schemes ares no longer politically feasible, the new guys have to find a new scheme. And the only thing the GOP has relied on while in power more than diversions is passing the buck to the voters.
[GOP state Sen. Jane] Nelson described the measures as “a no-brainer” and predicted they would have little trouble drawing support from a majority of the state’s voters.
She knows that constitutional amendments pass easy in those off year elections, when voter turnout is less than 10%.
The most interesting part is the leeway the wing nuts are giving their buddy Patrick on this. Just imagine what the reaction would have been in Straus has proposed this. BTW, he’s against this scheme.
House Speaker Joe Straus appears not to like the Senate proposals.
“For 36 years our state spending cap has helped enforce fiscal discipline, and we should be very cautious about any attempt to weaken it,” Straus, R-San Antonio, said in a statement.
Democrats should be against this as well. They should make the GOP play by the same rules they used when they gutted education funding. Of course, it’s tempting to go along with a scheme where it looks like they’re willing to give on some things. But unless the GOP is willing to give on expanding Medicaid and fully funding public education they need to steer clear of this.
Here at EOW we’ve written about the GOP’s neglect of this state for quite some time. The “tax cut not matter the cost” schemes the GOP has concocted over the years are the cause. There’s been money to fix these things, they’ve decided that tax cuts are more important. Via the Texas Tribune, Signs of Neglect, Wear and Tear in State Government.
It didn’t happen overnight. The deterioration in state parks, hit by a series of budget cuts and outright raids on its supposedly dedicated funding by lawmakers, has been a running plot line in the papers for several years.
Likewise, the deferred maintenance at state buildings, which could cost almost $1 billion assuming the work begins now, dates backs a generation in some cases.
But with a new crop of leaders taking the reins at state agencies, stories of neglect and bureaucratic woe are spilling out into the open more than ever — in testimony before the Legislature, interviews with the media and dry agency reports.
Newly elected Comptroller Glenn Hegar has seen it firsthand. In his earlies days on the job, he learned that a hole in the bathroom wall at the Lyndon B. Johnson building had to be patched with toilet paper. He found out a female employee had to get rabies shots not long ago after coming into contact with one of the numerous bats flying in the building. And he discovered the real purpose of a quilt on the wall of an employee’s office.
“I thought it was decoration, but, no, that’s to muffle the sound of the bathroom behind her wall, so you can’t hear people that are on the toilet,” Hegar told The Texas Tribune on Friday.
The maintenance problems are not confined to the comptroller’s office.
“We have leaking roofs that have caused damage to servers. We have elevators that don’t work,” Attorney General Ken Paxton, who recently took over the top state attorney job from Gov. Greg Abbott, testified recently. “I’ve been surprised at some of the issues that we’ve already had to deal with.”
Nowhere is the deferred maintenance more dramatic than at the Texas School for the Deaf. Its fire safety problems got so bad last year that the state fire marshal’s office threatened to shut down the historic South Austin school. To keep it open, the Texas Facilities Commission agreed to patrol parts of the campus 24 hours a day to ensure buildings don’t go up in flames — a sort of human fire alarm system to replace a mechanical one that doesn’t work in a wide swath of the campus.
“We didn’t see that as a necessity,” Peter Maass, a deputy at the Texas Facilities Commission, said of the fire checks. “[But] we said, okay, we’re not going to argue.”
Oh well, that’s a shame. But as Lt. Gov. Dan Patrick has told us, “tax cuts are coming no matter what“.
There’s at least one member of the Texas Senate who’s speaking out about what the real priorities of The Lege should be. It’s not tax cuts and the Senator in not a Democrat, Republican rains on tax-cut parade.
As state lawmakers clamber aboard the tax-cut bandwagon, one Republican is raining on the parade that has been so enthusiastically arranged by his party’s leaders.
Sen. Kevin Eltife points out repeatedly, publicly and with rhetorical flair that the state has a list of long-neglected problems whose solutions would mean more to Texans than even a couple of hundred more dollars in their pockets from tax relief.
His position puts him at odds with Republicans and some Democrats who are championing big tax reductions. They say there’s enough money in these relatively flush times to both meet state needs and cut taxes by billions of dollars.
The list of problems comes easily to him: troubled pension funds, infuriating road congestion, growing state debt, long-running litigation over public education funding, state buildings going without basic repairs and universities in need of facilities.
“I just can’t jump out there and support tax cuts — as politically popular as that would be — I cannot do it until I know for a fact we have solutions to state problems,” said Eltife, R-Tyler. “Most of my constituents want us to solve problems.”
Most, if not all Texans want that too. And threats aside Eltife is sticking to his guns, and driving the wing nuts crazy.
Eltife said he doesn’t think about elections when he’s doing his work of the session, which possibly would make him unique among lawmakers.
“I don’t know why anybody would worry about elections right now in the middle of session when we are trying to solve the state’s problems,” Eltife said. “If this is the end of my political career, so be it. It’s not going to keep me from talking about the problems of the state.”
Most in The Lege are worried about what their funders want, those are their true constituents. So to them the next election is what the only thing the legislative session is about. They don’t want to be kicked out of the club.
Despite the good financial situation Texas is in, we can’t forget that the surplus we have was been built through neglect. Taxes have been cut and much needed items have been neglected. The bills are coming due and we have money to pay them. Instead we’re going to give that money to the wealthy and big business who already have more then they need.
It’s key for everyone to understand how we got to the budget situation were in today in Texas.
The money that was cut from the budget in 2011, and not replaced in 2013, is responsible for the surplus we now have that the GOP wants to give back to the wealthy and big business in tax cuts. Both budget estimates turned out to be way off base.
That original deficit in 2011 was caused by the GOP Tax Swap Scheme of 2006. Everyone knew, when it was passed, that it would create a structural deficit.
Teachers lost jobs, schools were de-funded, and many were forced to sacrifice so taxes on the wealthy and big business would not be raised.
Just think about that.
The money was never intended to be replaced. The GOP used the ruse of a tax swap in 2006 and the budget crisis it created in 2011 to gut public education. And since then, with the surplus it created, their main concern is to give more tax cuts to the wealthy and big business.
Kuff has the latest on the GOP tax cut Olympics that are going on in The Lege right now, We can always pay for tax cuts later.
The problem with the current tax cut schemes being discussed in The Lege is that there’s little relief being offered to those who pay the most, as a percentage of their income, in taxes. Via QR.
Texas earns dubious distinction, 3rd worst state for taxes inflicted on average Americans
Current tax cut bidding war means nothing to most Texans
While the Senate and House are in a bidding war for the biggest headline number of tax cuts that most Texans will not feel, the online financial publication “Marketwatch” named Texas the third worst state for taxes inflicted on average Americans.
The analysis reports that the Lone Star State has the fifth highest effective tax rate on the state’s bottom 20% at 12.5% and the 8th lowest rate on the top 1% at an effective tax rate of 2.9%.
From the story, “…the state relies heavily on sales and excise taxes. These consumption taxes accounted for nearly 32% of the state’s revenue, the ninth highest nationwide in fiscal 2012. The state also doesn’t provide low-income residents with any tax credits, which help offset sales, excise and property taxes in other states.”
The story can be found here.
The budget schemes of the Texas GOP is not only about lowering taxes, it’s also about destroying government – doing away with what they believe is unnecessary.
Texas Lt. Gov. Dan Patrick finally spilled the beans yesterday on his proposed tax swap scheme – not it’s not a tax cut! Via the HChron, Texas lt. gov. lays out transition from property to sales tax.
Texas Lt. Gov. Dan Patrick gave a rousing speech to the Texas Association of Business’ annual meeting in Austin on Tuesday…
Patrick’s draft budget would cut property taxes by about $2 billion and business taxes by $2 billion. Frankly, I think the $9 billion Texas Margins Tax on business needs to be scrapped completely and replaced with something new, but Patrick doesn’t appear to have that kind of ambition. He said there are proposals to cut taxes on inventories and equipment, but he added it is still early days in the session.
To pay for these tax cuts, Patrick said he would begin the slow migration away from property taxes to greater reliance on sales taxes, something he talked about on the campaign trail.
“The revenues we get at the state level are primarily sales tax,” Patrick said. “What we’ve done is a gradual transition from bringing more people in to help pay for what a handful of people – businesses and property owners – have been paying.”
There is no doubt that more people directly pay sales taxes than property taxes. But there is also no doubt that sales taxes hurt poor people more than rich people because more of a poor person’s income goes to buy goods and services than a rich person’s. That’s the reason why most governments use income taxes is to spread the burden based on the ability to pay. [Emphasis added]
Of course it’s no surprise that his plan is to lower taxes on the wealthy by raising taxes for everyone else.
BTW, here’s a list of items (see pages 7 & *) that are currently exempt from sales tax and will likely, as Patrick says, start the “slow migration” to being taxed. Things like baby formula, milk, and water just to name a few.
It’s becoming pretty clear what the cost Lt. Gov. Patrick’s “no matter what” tax cuts will be. There’s public education of course, a favorite punching bag of conservative Republicans, Early tax cut promises have education advocates worried.
The starting budgets of the state House and Senate, released last month, are similar on many fronts, but not with respect to education. Faced with $4.5 billion in additional revenue from increasing property values, the House has chosen to reinvest a portion of that in public education while the upper chamber is focusing on tax relief, a decision not sitting well with educators.
“I don’t know how you could say that budget prioritized public education,” Lonnie Hollings-worth, governmental relations director at the Texas Classroom Teachers Association, said of the Senate budget. “We think the priority should be to fund our public schools and not to do tax cuts.”
A cursory glance at the Senate’s document indicates the upper chamber wants to provide billions more this biennium for public education funding. But the promises of many senators, including new Finance Committee Chair Jane Nelson, to provide $4 billion in tax relief leave only around $200 million available for schools.
Here’s the interesting thing about the property tax cut that Lt. Gov. Patrick is proposing. The reason property taxes are out of control is because the state hasn’t increased revenue in a long, long time. Without increased funding from the state cities and counties have been forced to raise local taxes to keep up with needs.
City and county officials say they will work to educate lawmakers on the problems caps could bring. The messages vary across the state.
The Texas Municipal League has argued that cities and counties don’t deserve the blame for growing property tax bills. City taxes make up only 16 percent of the taxes levied across the state, while schools account for 55 percent of all property tax bills statewide, the organization says.
“Our message is that we are not the problem,” Sandlin said.
And leaders of fast-growing cities and counties say they need property tax revenue growth to pay for new roads, sewers and other infrastructure. Caps on how much appraisals grow could simply force cities to increase the tax rate, opponents of the bills say.
And the schools need that money because of the cuts to public education the state made during the budget “shortfall” in 2011. Which was not restored once prosperity returned in 2013.
The most egregious part of this is who will benefit and who will pay for these purported tax cuts.
Dallas County Judge Clay Jenkins said he worries that the caps would mostly help the rich. Property values tend to rise faster in the wealthier parts of town, he said, so those homeowners are the ones who would benefit most from a cap on appraisals.
“It is disguised as a tax break for all, but it is actually a shift from the upper class to the rest,” Jenkins said.
It’s the age-old story. The rich get richer, and the poor get poorer.
The cost of these tax cuts are not just to our pocket books. But they are to the future of Texas. The needed investments in education and infrastructure will be forsaken so the wealthy, who already have more then they need, can have even more.
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