Latest Word on Budget, Rainy Day Fund, Revenue

House budget-writers debated plans to use a portion of the Rainy Day Fund at a hearing held this afternoon. A vote is expected soon on HB 275 by Rep. Jim Pitts, Republican of Waxahachie, a bill to use $4 billion of the $9.4 billion in the Rainy Day Fund. Texas AFT supports this move as a necessary first step but one that is far from sufficient to address the shortfall of $27 billion in state revenue.

The committee heard some good news today from the state comptroller’s office, which said sales-tax collections are coming back strong—enough so that the comptroller has added $300 million to her official estimate of available revenue. There was a strong hint today that a further upward revision is possible before the legislative session ends in May.

In the Senate Finance Committee this morning, a more modest proposal was put forward as part of SB 1278, by Sen. Steve Ogden of Bryan, which would use $2.8 billion or more of the Rainy Day Fund. Sen. Royce West, Democrat of Dallas, said he intended to seek an increase in that amount.

In that same Senate hearing, Texas AFT testified against a proposed constitutional amendment that would make it much harder to raise needed revenue. SJR 12 by Sen. Dan Patrick, Republican of Houston, would require a two-thirds majority in each house of the legislature in order to increase a state tax or create one. As Texas AFT’s Patty Quinzi testified, “this proposed constitutional amendment would empower a small minority of legislators—as few as one-third plus one in one chamber–to dictate state tax policy. As a practical matter, it would drastically narrow the options available to the majority of lawmakers to make needed adjustments in state taxes, such as the underperforming business margins tax.”

The House tax-writing Committee on Ways and Means heard a bill today that won Texas AFT’s support, because it would get rid of an unjustifiable tax break that currently diverts significant sums from the state treasury. HB 2045 by Rep. Lon Burnam, Democrat of Fort Worth, would reduce the so-called “timely-filer discount” that lets merchants keep a portion of sales taxes they collect from consumers. This reward, simply for forwarding to the state the sales taxes that consumers have paid, bears no relationship to merchants’ actual low costs of computerized tax collection and remittance. So Burnam’s bill would cap the discount at $3,750 annually, and in 2012-2013 this change would save the state $85.3 million. By narrowing this tax loophole, the state could save the jobs of nearly 900 teachers (based on average teacher pay as calculated by TASB) —to cite just one example of how this revenue might do some good. The tax code is shot through with obsolete provisions like this one, and systematically closing these loopholes would help avoid many cuts in education and other core public services.