By J. Lyn Carl, GalleryWatch.com
Austin, TX –
In spite of a steady stream of mostly Democrats staging their last hurrah by voicing their opposition to HB 3, the property tax relief bill was finally passed out of the House today.
The vote tally was 71-66. However, after the session ended, there was some conversation regarding a possible voting machine malfunction that allegedly incorrectly recorded the votes of Reps. Ruth Jones McClendon (D-San Antonio), Rafael Anchia (D-Dallas) and Harvey Hilderbran (R-Kerrville). All three apparently voted against HB 3, but said the voting machine showed them as either voting "yes," or as "absent."
House Journal Clerk Julia Bass said the final record vote tally remains 71-66, although some House members who feel their votes were incorrectly recorded can file statements to that effect. Even if the votes of those three members were changed to "yes" votes, the bill would still have passed, but by a smaller and possibly only a one-vote margin.
In speaking against the bill, members touched on issues from the effects the bill will have on middle class Texans, on who will actually benefit from the tax cuts and how public education might suffer as a result of the bill's passage.
Many middle-income families deal with "unbudgeted expenses" every day, said Rep. Pete Gallego (D-Alpine), and taxes on auto repairs or bottled water just create more expenses for them. He said much already has been added to the state coffers at the expense of the middle class. "This adds to that list." Noting the middle class will have a lot to say about the future of Texas, Gallego added, "Will they think of this as a tax cut or as a tax increase?"
Rep. Helen Giddings (D-Dallas) disagreed with Rep. Carl Isett (R-Lubbock) when he said HB 3 is a "first step" toward ending a problem that has existed since the last school finance bill was in place. "In the long run, Texas and the kids in Texas will be better off for it," he said, and property owners "unduly saddled by a flawed system" will get relief.
"This is a bill for the privileged," responded Giddings. "All of us who sit in this chamber are people of privilege." She said while Isett was talking about "this big tax decrease, which I don't see," she sees the bill as "not fair" and "not balanced."
"Is it good for me? Yes. But I didn't come here to represent me. I came here to represent 135,000 other people." She said an increase in the homestead exemption to $45,000 would have helped all homeowners, where HB 3 does not.
Speaking in support of the bill, Rep. Anna Mowery (R-Fort Worth) reminded members that when the sales tax rate in Texas (even with the increase proposed in HB 3) is compared to that of other states, people forget to say that those other states tax "every item of food that you buy." She said she is "very pleased and proud" that Texas does not tax food items. "Let's remember our people in our district who are raising families are not having a sales tax on their food items." Mowery said the sales tax rate may be high, "but we don't tax the one thing (food) that is essential for our livelihood."
Rebutting Mowery's remarks, Rep. Senfronia Thompson (D-Houston) cited a number of states - California, Minnesota, Nevada, Rhode Island, New Jersey and others - that have a lower sales tax rate in Texas and do not tax food.
"The question is not what's NOT in this bill, it's what's IN it," said Rep. Garnet Coleman (D-Houston). "That's where the shift in taxes begins to hurt those people who really are working hard and playing by the rules." He said those individuals get up and go to work every day and pay their taxes and contribute to society. "They will be paying for another person's tax cut, particularly those who make over $140,000 a year."
Coleman said in his home county, Harris County, more than 50 percent of the residents there live in rental property, so they get no tax relief from HB 3. "For them, this isn't the largest tax decrease bill ever presented - it is the largest tax increase bill ever presented."
Rep. Scott Hochberg (D-Houston) took to task those who say HB 3 would solve the school finance problems the Supreme Court is looking at because it puts money into the system and reduces the property tax cap. "That's a cool concept if it works," he said. However, he said the only way to get to that point is to "grow more money." With the state's heavy reliance on the sales tax to raise money, he said, "We don't grow the system much faster than we are now." That will grow even flatter in the future, said Hochberg and the state will not be able to buy down the cap enough. The situation will then worsen, because school districts will have to push up their tax rates to deal with growth and inflation.
Because 82 percent of his constituents live in apartments, "This is not a revenue neutral bill to them," said the Houston Democrat. He said the challenge the legislature faces is that to grow the revenue in the economy, one has to tax the things that are growing the economy, which many see as an effort to "kill the golden goose."
"I can vote for a tax bill if I know what it pays for," said Rep. Craig Eiland (D-Galveston). However, HB 2 (the public school reform bill) is contingent on passage of HB 3. "I don't know what HB 2 is going to look like when it comes back from conference - if it ever does."
While property taxes indeed need lowering, said Rep. Sylvester Turner (D-Houston), the state also must provide a quality education for the state's schoolchildren. "With HB 3, we are lowering property taxes, but we are also devaluating our public education system." He said it is "unfair" to provide property tax relief only "for some."
One of the few speaking for the bill was Rep. Larry Phillips (R-Sherman), who noted that Texas can't compete with other states in attracting business and industry because of its high ad valorem taxes. Business ends up across the border in other states, he said. And in response to those who oppose the proposed sales tax increase in HB 3, Phillips added, "You can't pay a sales tax if you don't have a job.
"This is a step in the right direction to make our state more competitive." Phillips said when business goes across the Texas border into other states, "We lose out." He countered claims that the bill benefits only the wealthy by saying that all Texans benefit from the dynamic impact of the bill - increased investments in the state, increased personal income, and increased employment.
Bill author Rep. Jim Keffer (R-Eastland) described HB 3 as "a step" and "a journey," one that he said is not yet finished. Texas ranks 45th in home purchases and home ownership, he said, mainly because of high property taxes. " Renters are renters because they can't afford the property that the house sits on," said Keffer, noting that passage of HB 3 will help them realize their dreams of home ownership by reducing that tax burden.
Rep. Mark Homer (D-Paris) said he could not speak for a bill that is not a "positive" for his constituents. And to those who have called bill a "first step," Homer agreed, but qualified the statement saying it is "a first step off the cliff for most Texans."