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March 11, 2004

Perry To Unveil New Tax Plan

By Andrew Dobbs

The product of Pretty Boy Perry's vacations in the caribbean and Italy on your dime will finally be unveiled this week it seems. Perry will be joined by far right anti-tax activist and wingnut radio show host Dan Patrick and Harris County Tax Assessor Paul Bettancourt to unveil an unweildly plan based at least loosely on California's infamous Prop 13. From the Startle-Gram:

The governor's office declined to release any details of the plan, which is to be unveiled in Houston and San Antonio today.

But one top Republican official who has been briefed on the announcement and another familiar with the plan's contents say it calls for restrictions on yearly property appraisals and hard caps on the amount of revenue flowing to taxing entities. Both spoke on condition of anonymity.

Among other things, the officials said the draft plan calls for:

Mandatory disclosure of home sale prices to appraisal review boards, which would then have to take the information into account when calculating the value of a house.

Capping the revenue -- it doesn't say at what amount -- that local taxing entitities receive; the plan would allow for new home and apartment construction to be added to the tax base.

Allowing school districts to make adjustments in the cap to accommodate student enrollment growth and inflation.

Capping yearly home appraisal increases at 3 percent. (For tax purposes, a homestead's value currently may rise by no more than 10 percent a year).

Provisions requring the Texas Legislature to fund any mandates it places on local governments.

A requirement that any move to exceed the property tax cap would require a vote of the people on a pre-scheduled election date.

Perry is proposing to cut property taxes as part of a school finance reform package that could be presented in a special legislative session next month.

The Chronical has more on Governor Goodhair's inspiration for the package:

Bill Allaway, president of the Texas Taxpayers and Research Association, a business group, said he has been told the governor has been looking at two options.

One is the plan enacted in Colorado that prohibits local governments from increasing revenue from property taxes in excess of a certain trigger, such as inflation or population growth, without a vote of taxpayers. It is a way of controlling growth in local government expenditures, he said.

The other, he added, is a plan that Florida has used for several years. It limits increases in appraisals of homesteads to 3 percent or the rate of inflation, whichever is less.

"It has taken a huge amount of property off the tax rolls (in Florida)," he said.

Asked which plan, if any, he thought Perry would propose, Allaway replied, "I think he may be coming down on all of the above."

He said his group doesn't like limiting appraisals only for residential property because it transfers the tax burden to all other taxpayers, including businesses and apartment owners. He said he has mixed emotions about the revenue limits used in the Colorado plan.

Allaway said such limits are similar to Proposition 13, an initiative California voters passed in 1978 that limited property tax growth. Some Californians blame the measure for causing a decline in public education.

Let's be honest, Prop 13 was a disaster for California. The current budget nightmares there can in large part be traced back to the proposition that has tied their hands in terms of revenue. Still, propery taxes are too high for many Texans and there must be some kind of reform. Some of my sources suggest that he might also introduce property tax roll splitting where homestead taxes would go to local governments and business taxes would go to the state. This is a sop to the GOP's suburban constituents at the expense of Democratic urban voters. Urban communities tend to be poorer and thus have a greater need for the services that these taxes pay for but they tend to derive much of their revenue from taxes on business, not homes. So not only will they have greater need, they will have less money to meet these needs and the great spiral into despair begins. Suburban communities, with their enormous property values, will be high on the hog under this plan- which is what the GOP has been looking to do all along.

I won't pretend to have that great an understanding of all these issues- I'm picking a lot of it up as I go along. I do know that our communities are strapped for cash now and telling them that their hands are tied on raising any new revenue will only exacerbate problems. Remember that Rick Perry was rubbing coconut oil on Grover Norquist's hairy back down in the Caribbean earlier this month, the same Norquist that said that he wanted to shrink government small enough to "drown it in the bathtub." Perry's plan will starve the poorest communities of any resources and will ensure tight belts for local governments for the forseeable future. Raising the kind of revenue needed to amply address our health care crisis, our infrastructure crisis, our alarmingly high dropout rate or our increasing costs of public safety will be next to impossible and Texas will be relegated to Mississippi-esque status. We deserve better than that and this plan must be addressed. We'll see how the plan unfolds over the next several days I'm sure.

Posted by Andrew Dobbs at March 11, 2004 02:01 AM | TrackBack


I like to read your site for information on Texas politics...but you are starting to go over the edge. I don't find the simple bias in the posting. It is expected as your site has a point of view. But, the posts are becoming more outrageous.

Posted by: don (rush in disguise) at March 11, 2004 06:53 AM

You do realize that Perry hasn't gone to Italy yet, correct?

Posted by: Larry Eustachy at March 11, 2004 09:06 AM

The problem in California -- as it has always been -- is government waste, not necessarily Prop 13.

Posted by: Vic the Libertarian at March 11, 2004 09:10 AM

Capping the property tax, as Prop 13, caused a sudden and dramatic decrease in revenues. Unless there is thoughtful discussion about what is going to be cut in the absence of funding, we're going to see bad decisions under extreme duress.

Property taxes are inherently unfair that taxes on prospective wealth, not actual wealth. You want to tax me at the time of the sale of my home? Fine. But this is one of the worst tax schemes that we could have. I've used the example before, but my parents owned several acres, which my parents bought when land was relatively cheap. Being in construction, my father was able to build our house cheaply. After my father died, my mother had very limited income, yet she paid property taxes which assume that you have a corresponding disposable wealth. Even with certain breaks for her age, she was forced to sell the land and home, which turned out to sell at 60% of what it was valued at for taxes.

In the last 5 years, my home (which I bought at an excellent price) has gone risen in value by 40%. My income has risen only 5% in that time, and my expenses have significantly increased, as we now have two children.

The stories go on and on. The solution isn't capping property taxes: It's eliminating them. Regardless, any significant reduction requires a public, honest discussion of what's going to get cut, something I can almost guarantee the gutless wonders of Austin won't do.

You might think Andrew is writing in hyperbole, but in the late 80s when we faced a budget deficit, one solution getting serious consideration was shutting down several colleges. A friend of mine who worked for the governor confirmed that this was a plan very close to implementation.

Posted by: Tx Bubba at March 11, 2004 10:15 AM

I'm sorry you don't like the tone- I have always been a "go for the jugular" type, but I like to think that I still talk about real issues and discuss real problems. You are right, Vic, wastefulness is problematic in CA. But even when they had conservative leadership under Reagan, Deukmejian and Wilson they had budget issues. Reagan passed the biggest tax increase in state history to begin his term as governor just to keep the state afloat. The tax revolt made things miserable for his successors. In Texas, we don't have any fat left to cut, we've been cutting into the muscle and bones of our social services and education system for some time now. This scheme will strangle our local communities, particularly our poor urban communities, to death and will be bad for texas.

And I wasn't sure if he'd gone to Italy yet, I'm sorry for the confusion, but the line still works.

Posted by: Andrew D at March 11, 2004 12:33 PM

The plan, as I see it is "bankrupt local governments and let my successor figure out how to clean up this mess."

Posted by: Jim D at March 11, 2004 01:57 PM
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