TAXES

A presentation on "Building Texas: The Tax and Budget Primer, 2008."

The Center for Public Policy Priorities today released the following statement in response to a report, "Competitive States -- Texas vs. California: Economic Growth Prospects for the 21st Century," published this afternoon by the Texas Public Policy Foundation. The report badly misreads the likely outcomes of Texas’ inadequate investment in vital public structures, including our education and transportation systems

At a hearing of the Texas House of Representatives Select Committee on Property Tax Relief and Appraisal Reform, chaired by Representative John Otto, in Houston on August 18, Representative Dwayne Bohac and Senator Dan Patrick presented a plan that they say would allow the Legislature to create a 5 percent annual appraisal cap on residence homesteads rather than the present 10 percent cap without a constitutional amendment. But their plan is based upon a misunderstanding of what the constitution says after its most recent amendment in 2007. Lowering the cap does require a constitutional amendment.

The key to adequate funding of essential state services in the 2010-11 state budget is an adequate amount of revenue. Recently we explained the process of writing the 2010-11 budget and how to get involved. This Policy Page highlights some of the potential threats to maintaining state tax revenue and outlines how you can participate to ensure that the state has the money necessary to fund a budget aligned with your valuesâ€"a budget that invests in critical public programs and structures necessary to create opportunity and prosperity for all Texans.

The quality of life in Texas depends on our producing a well-educated workforce that can meet the demands of a global economy. A strong and vibrant public education for all Texas children is an essential precondition for a prepared workforce and a prosperous, competitive economy. In fact, providing public education is one of the constitutionally mandated charges of the state legislature. However, the state’s current revenue system is not providing adequate funding to fulfill this charge. Adding a personal state income tax to our tax mix is the best way to meet our needs.

The state budget funds critical public systems upon which we all depend. Unfortunately, a realistic analysis of both sides of the state’s balance sheetâ€"income and expensesâ€"shows that Texas faces another tight budget in 2010-11. While the state will probably have more available revenue than it did for 2008-09, it will also have more people and higher costs, quickly using up any additional funds. Recently the Speaker of the House suggested that the state might have a $15 billion “surplus” by the end of the biennium, with the Comptroller saying that her most recent estimate projects $10.7 billion. But neither is using the term “surplus” in its ordinary sense. In fact, both estimates include expected balances in the Property Tax Relief Fund, which is already committed to pay for previous tax cuts, and in the Rainy Day Fund, which is reserved for emergencies. In all likelihood, the state will again be unable to fund critical public services without new sources of revenue.

This easy-to-digest booklet on Texas taxes and public spending will help you think about the challenges facing us as Texans. Our public systems and structuresâ€"such as our public education systems, courts and criminal justice systems, and transportation networksâ€"help make this a great state, securing the common good for us all. This primer discusses what we need to do to enhance our prosperity and how to pay for it.

NOTE: Booklet version is formatted for two-sided printing. If you can only print one-sided, use "side by side" version.

Every April, the Tax Foundation releases a report celebrating “Tax Freedom Day.” The Tax Foundation was founded in 1937 by the top leadership of General Motors, Standard Oil, and Johns-Manville Corporation. Its focus is to keep taxes low irrespective of the need for taxes in maintaining public infrastructure to support our economy and quality of life. "Tax Freedom Day" is a make-believe day based on disingenuous reasoning that has serious methodological flaws.

CPPP submitted this letter brief to the Texas attorney general explaining that only land ownersâ€"not people who are leasing landâ€"are entitled to a tax abatement as part of the Texas Economic Development Act.

The Senate is soon to take up the economic stimulus bill. We have urged our Texas Senators to vote against the House bill to give the Senate an opportunity to produce a better bill. If the House bill is defeated, we have urged our Texas Senators to vote for the proposal from the Senate Finance Committee. If an amendment to the proposal is offered for a temporary boost in food stamp benefits, we have strongly urged our Senators to support the amendment. A temporary boost in food stamp benefits is a particularly good economic stimulus for Texas. Our letter to our Texas Senators is posted here as a Full Article. We urge you to contact each Senator with a strong message to support the Senate Finance Committee proposal and a food stamp amendment. You can contact Senator Hutchison at http://www.senate.gov/~hutchison/contact.html. You can contact Senator Cornyn at http://cornyn.senate.gov/public/index.cfm?FuseAction=Contact.Home.

An effective federal economic stimulus package must target aid to those who will be hardest hit by a recession and who will most quickly boost the economy by spending to support their families. Today, national groups are asking organizations in Texas and other states to sign on to two letters calling for timely, targeted, and temporary assistance to those most in need. The first letter calls on Congress to include (1) an increase in the Medicaid federal medical assistance percentage (FMAP), with a requirement that states must maintain eligibility to qualify for the funds; and, (2) a grant based on population. The second letter urges Congress to boost Food Stamp payments and extend unemployment benefits as part of the stimulus package. The Congressional Budget Office reports that Food Stamps and unemployment insurance would stimulate spending even more quickly than rebates. Congress is reported to have dropped these elements from the stimulus package and would instead boost business tax incentives, which are among the least effective ways to increase economic activity.

The current weakness in the U.S. economy requires a rapid response that targets aid to those who will be hardest hit by a recession. Assistance should reach all working households because they are most likely to immediately put any assistance back into the economy by spending to support their families. This can be accomplished by rebate checks, increased Food Stamp aid, or extension of unemployment insurance, as well as fiscal relief for state governments. Well-designed one-time measures would raise current deficits, but not affect the long-term federal budget outlook. President Bush and congressional leaders are considering various strategies for combatting the growing weakness in the U.S. economy. At the top of their list are rebates for workers, expansion of safety net programs, and tax incentives for businesses. An effective fiscal stimulus is one that is timely, targeted, and temporary.