Speaker Bonnen’s camp worked to calm fears of any attempt to revive the tax swap this session: “It became clear that even in the event of the House’s passage, this legislation would be unlikely to pass in the Texas Senate, as evidenced by their vote on House Bill 3.”
Note: This story has been updated following the appointment of conferees on HB3 -sb
The last 24 hours were a fascinating exercise in the Big Three being saved by the members, it would seem, from the political misstep of a sales tax increase with the promise of buying down property taxes. As James Henson and Josh Blank note, the polling did not look good.
As we reported early in the day, Texas House Public Education Committee Chairman Dan Huberty, R-Kingwood, was telling folks he would pull down the proposed constitutional amendment after theSenate moved to make the sales tax increase irrelevant under what they envisioned for school finance.
To his credit, Chair Huberty has been a consistent proponent of shifting toward an increased consumption tax as the preferred method for funding government.
But the idea of a sales tax-property tax swap remaining in the mix lasted less than a day after the upper chamber passed its school finance plan. Even though Huberty could potentially have pushed the sales tax proposal through the House with a simple majority, why cut up the members when it won’t ultimately become law?
It has not been lost on members that third-party groups like Empower Texans have just recently decided they don’t like the idea of a sales tax increase. Tim Dunn’s spokesman Michael Quinn Sullivan previously testified in favor of the same thing but now routinely skewers the members, the presiding officers, and the governor over it.
They’re making a new list of potential targets in the primaries, it seems.
Sen. Larry Taylor, R-Friendswood, had hinted a workgroup had been meeting to come up with an alternative to a sales tax-property tax swap.
After considering the options, Sen. Kirk Watson, D-Austin, on Monday led the charge to create what would be called the Tax Relief and Excellence in Education Fund, or TREE: a combination of $2.3 billion in excess severance taxes, with a November vote; $300 million in additional revenue from the School Land Board into the Available School Fund; and $300 million from the proceeds from the sales taxes that will be collected in the wake of the U.S. Supreme Court Wayfair online tax decision.
That’s a total of $2.9 billion on top of the $2.3 billion in the original bill. It was enough to create a 10-cent tax decrease in property taxes. The original Senate plan was to push all the $2.3 billion to the first year of the biennium for tax relief, then add to the compression in the second year with the sales tax-property tax swap.
That choice created a wide variety of winners: Conservatives, including Sen. Paul Bettencourt, R-Houston, could say they had not taken a vote on more taxes. Teacher groups could claim their $5,000 pay raise. And Democrats could claim both an unprecedented $9 billion for school funding without requiring a vote on an unpopular sales tax increase.
Even as the tax swap seemed to be dead for the session, some Republicans and Democrats alike said they would remain vigilant as HB3 moves through the process. Right before Chair Huberty moved to not concur on Senate changes, some were concerned there would be an instruction to conferees to go outside the bounds, potentially to revive the tax swap.
That did not happen and there were cheers in the chamber as Huberty moved to appoint a conference committee. Instructions to conferees are not binding, by the way and in reality going outside the bounds of what's in the bill is always an option.
The conferees are Chair Huberty, Trent Ashby, Diego Bernal, Mary Gonzalez, and Ken King.
Speaker Dennis Bonnen’s office sought to make clear the tax swap is dead until 2021 at the earliest.
“This legislation was an opportunity for lawmakers to further reduce property taxes and sustain the relief provided in House Bill 3 in the future,” said Cait Meisenheimer, Press Secretary for Bonnen.
“It became clear that even in the event of the House’s passage, this legislation would be unlikely to pass in the Texas Senate, as evidenced by their vote on House Bill 3,” she said in a written statement. “Speaker Bonnen believes it is in the House's best interest to devote the limited time left in session to our Day One priorities -- passing legislation to provide meaningful school finance and property tax reform for all.”
Meantime, some complained that the Senate seemed to be slow walking appointment of conferees on Senate Bill 2, the rollback rate legislation.
But others urged calm.
“There’s plenty of time,” said one veteran lobbyist.
Note: QR’s Kimberly Reeves contributed reporting on what unfolded in the Senate on the details of its school finance fix.