Dems Offer Alternate Tax Plan

March 4, 2005, 4:18PM


Schools, homes in lower bracket would see benefit

By JANET ELLIOTT
Copyright 2005 Houston Chronicle Austin Bureau


AUSTIN - House Democrats countered Thursday with a school finance plan that they said would do more for homeowners and schools than a Republican-backed plan, but they did not detail how it would be funded.

Rep. Jim Dunnam, D-Waco, said the Democrats' plan, which will be offered during House floor debate next week, would give greater school property tax relief to owners of homes valued under $170,000.

They said their numbers show that homeowners in all but two of Harris County's 25 House districts would receive greater property tax savings than provided in the Republican-backed House Bill 3, which was approved Wednesday by the House Ways and Means Committee.

Those savings would range from $57 for people living in Rep. Joe Nixon's southwest Houston district to $273 in Rep. Kevin Bailey's district in north-central Houston.

Homeowners in districts represented by Beverly Woolley and Martha Wong, where the average home value exceeds $300,000, would see about $400 less in property tax relief than offered in HB3.

Woolley's district includes Spring Valley, Piney Point Village and several other west Houston neighborhoods and Wong's district includes River Oaks and West University Place.

"Our plan extends greater tax savings to more Texans," said Rep. Scott Hochberg, D-Houston.

To accomplish the tax savings, Democrats would reduce local school property taxes for maintenance and operations by about 16 percent, and would triple the homestead tax exemption from $15,000 to $45,000 — but only for school property taxes.

Business property owners would not get that exemption.

The Republican leadership's proposal, passed Wednesday and headed for floor debate next week, would cut school property taxes for business and residential owners by a third.

Both plans would spend about $14 billion over the biennium for property tax relief and education spending.

But the Democrats would spend more on education and less on property tax cuts for business property and high-end homes.

Republicans, including Woolley, said in a written response that the Democrats' proposal would require a tax hike, while the Republican plan is revenue-neutral.

"Our plan puts $3 billion more into education and cuts spiraling property taxes by one third, and we get more education for each dollar by asking districts to spend money more efficiently," said House Public Education Chairman Kent Grusendorf, R-Arlington.

Republicans control the Texas House by a margin of 87-63. About half of the House Democrats appeared at a news conference announcing the alternative proposal.

Also Thursday, the House Republican leadership said they inadvertently left newspapers out a list of products and services that would be subject to the sales tax.

Don Green, director of budget and policy for Speaker Tom Craddick, said an error in drafting HB3, an $11 billion tax bill, that didn't include newspaper sales will be corrected next week when the bill is debated on the House floor.

If HB3 passes, newspaper sales would be taxed along with bottled water, motor vehicle repairs, car washes and billboard advertising.

The bill also would increase the state sales tax from 6.25 percent to 7.2 percent and replace the franchise tax with a 1.1 percent tax on a business's payroll. Additionally, HB3 would raise the cigarette tax by $1.

Information released by Craddick's office during a briefing with reporters showed that consumers will pay the bulk of new taxes under HB3. That contradicted statements Wednesday that the proposed business payroll tax would provide most of the new revenue.

The Democrats said their plan would provide $5 billion in extra spending for schools over the biennium. The House Republican leadership's plan offers an extra $3 billion.

Hochberg said that money would be used to bring all teachers up to the national average salary, maintain a $1,000 health care benefit for all teachers and other school district employees and boost funding in areas with high concentrations of low-income, bilingual schoolchildren.

Although the Democrats didn't offer a specific tax plan to pay for the $8.6 billion in lost property taxes, Hochberg said the Democrats would be studying the tax package in HB3.

janet.elliott@chron.com
http://www.chron.com/cs/CDA/ssistory.mpl/metropolitan/3067834