Status of Tax Reform Bills

The Senate Finance Committee met today to take up and consider the package of tax reform bills that the House of Representatives passed earlier in the week. The votes cast today mostly broke down along party lines with the Republicans voting for the bills and the Democrats generally voting against the bills.

Bills Voted Out of Committee

House Bill 2 (dedicates future revenue from House Bills 3, 4 and 5 to property tax relief) was voted favorably from committee as substituted. The substitute bill provides that all future revenue generated from House Bills 3, 4 and 5 would be used to buy the property tax rate down to $1.00 per hundred-dollar valuation. At that point, one-third of such revenue would go toward educational spending and two-thirds would go toward property tax relief until the property tax rate reaches 75 cents per hundred-dollar valuation. At that point, such revenue would go toward educational spending as long as there is enough revenue to maintain the property tax rate at 75 cents per hundred-dollar valuation.

House Bill 3 (replaces the franchise tax with a new "gross margins tax") was voted favorably from committee without amendments.

House Bill 4 (changes the sales tax reporting on used car transactions) was voted favorably from committee as substituted.

All three bills will now go to the full Senate for a vote. If adopted by the full Senate as they currently exist, House Bill 2 will go directly to the Governor for his consideration, while House Bills 3 and 4 will go back to the House so that the House has the opportunity to consider the bills as amended by the Senate.

Bills Still in Committee

House Bill 1, House Bill 5 (raises the taxes on tobacco products), and Senate Bill 6 will be taken up by the Senate Finance Committee at a hearing to be held on Sunday, April 30.

House Bill 1 - As passed by the House, this bill uses some of the state surplus to provide enough property tax relief to meet the Texas Supreme Court's June 1 deadline to change the state's school finance system. On Sunday, it is expected that Senator Florence Shapiro will introduce a committee substitute that rolls education reforms into the bill.

Senate Bill 6 - Was filed today by Senator Steve Ogden to handle amendments to the tax bills. Senator Ogden said he would accept amendments until 5 pm Saturday.

For more information please contact:
Monty Humble - mhumble@velaw.com - 214.220.7746
Joe Bill Watkins - jwatkins@velaw.com - 512.542.8460
Bill Jones - bjones@velaw.com - 512.542.8730