Franchise tax remains unchanged, but more companies must pay it
By Jason Embry
Tuesday, June 21, 2005
Gov. Rick Perry plans to call today for a school-finance plan that cuts property taxes, expands the state sales tax to computer repairs, car repairs and cosmetic surgeries and increases the cigarette tax by $1 a pack.
It also would require more companies to pay the corporate franchise tax, but it does not appear to make changes to that tax, as the House and Senate have proposed.
According to an outline of his plan obtained by the American-Statesman, Perry also wants a $1,500 pay raise for teachers and to give schools textbooks that are now sitting in warehouses because the state has not paid to use them.
Perry's office confirmed that the outline is accurate. He is scheduled to lay out the plan at a 2 p.m. news conference, two hours after the Legislature began a special session to tackle the school-finance issue.
Perry would cut the maximum property tax rate for school maintenance and operations from $1.50 per $100 in property value to $1.20. He also would
expand the amount of a home that is exempt from school property taxes from $15,000 to $22,500.
Perry wants to decrease property taxes even further in upcoming years so that the maximum rate on operations would be $1.05 by 2010.
Perry would increase the general state sales tax rate and the rate on car and boat sales from 6.25 percent to 6.95 percent. That's less of an increase than the House approved but more than the Senate passed.
The two sides could not agree on a school finance plan during their 140-day regular session this year, which ended May 30.
Perry wants to cut about $300 million more in property taxes than he would raise in other taxes. The outline touts spending gains for education, but does not specify where he would find that money.
His plan would also double occupation fees that must be paid to state regulators by such professions as doctors, dentists, accountants and lawyers.
Perry has discussed boosting education spending by $2 billion over the next two years, which is less than the House and Senate shot for during their regular session and far less than many education groups want.
During the regular session, Perry did not offer specific proposals to change the way Texas pays for public education.
During a special session last year, he proposed allowing video lottery terminals at racetracks and charging a tax on patrons of topless clubs, among other things. The House unanimously rejected that plan.