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The Committee met to hear public testimony over the property tax, franchise tax, and sales tax related bills discussed in the March 2nd and 3rd hearings.
 
Dale Craymer, President, Texas Taxpayers & Research Association

  • The biggest barrier to investment in Texas is the property tax; we recommend property tax rate cuts
  • Has concerns with the escalator provision of the homestead provision in proposed bills/resolutions; we suggest itemizing property tax bill for easy analysis
  • Oppose SB 8
  • Sen. Watson asked Craymer’s opinion on whether the new franchise tax exemption will help create new jobs; do you think it will help us attract big employers to the state if they’re the only ones paying the franchise tax?
    • Tax cut will help stimulate private sector but a franchise tax cut will create very few direct jobs for small businesses
    • SB 8 sends the message that we expect larger businesses to carry the load
  • Sen. Seliger asked Craymer to compare the old and new taxpayer base under the franchise tax
    • There are fewer tax payers paying franchise tax under the proposed legislation compared to the old franchise tax
  • Sen. Bettencourt asked if we should modify the franchise tax or look to eliminate it.
    • We would prefer simplifying the tax to make it digestible for tax payers, and if that doesn’t work, eliminate it
  • Sen. Hancock voiced concern that the proposed franchise tax is overly complex and burdensome on small business

 
Bill Hammond, CEO, Tex Association of Business

  • SB 1 – the Association is accepting of raising the homestead provision but is concerned with the accelerator which would shift the burden to the business community over time
  • In support of SB 7
  • SB8—raising exemption creates concerns; 4 million dollar exemption is an issue
  • Sen. Bettencourt asked whether SB 1 homestead accelerator would be more acceptable with an exemption index?
    • Yes
  • Sen. Taylor comments that if you’re reducing the amount of businesses paying the franchise tax then they are likely not paying more if you raise the rate. Makes more sense from an administrative standpoint to exempt the small businesses from the franchise tax because large businesses have in house accountants who can easily handle the increased regulations

 
Dick Lavine, Center for Public Policy Priorities

  • Tax cut shouldn’t be a priority right now; improving state transportation infrastructure should be a priority
  • Transportation is hindering business operations more than taxes; traffic congestion is to the point that it is hindering efficiency and many businesses are having to hire additional employees for jobs that used to be performed by one employee
  • The Senate should ask for an equity note for all tax bills that reach the floor

 
Todd Staples, President, Texas Oil and Gas Association

  • Franchise tax pales in comparison to property tax; prop tax is huge detriment to job creation and bringing additional businesses to Texas
  • Inventory tax will not benefit Oil and Gas industry, would prefer it as an option to franchise tax
  • Sen. Bettencourt would like to know why he opposes franchise tax
    • Rate reduction on franchise tax is preferred, and ultimately elimination

 
Renee Lota

  • Oppose SB 7 and 8 because money needed to fund tax break could be better used for health insurance for teachers or other public employees as it will be spent in the general economy and be more beneficial to the state
  • Study by Perryman Group on teacher retirement system and its impact on business; a pay raise for teachers would greatly benefit businesses and the economy

 
Ray Freeman, Executive Director, Equity Center

  • SB1 – propose a short term, year long “hold harmless” so the system can catch up and calibrate formulas
  • Sen. Hancock asked if existing formulas create an equity disparity and how school districts across the state view them
    • No, they are fairly equitable if all money is delivered through them, though they are outdated and need some adjustments

 
Hector Rivero, President, Texas Chemical Council

  • Property tax is the biggest impediment to Texas business investment; urge to focus efforts on property tax
  • SB 1 would create an escalating tax disparity against businesses and could discourage future business investment in the state
  • Support SB 758
  • Oppose SB 8
  • Sen. Bettencourt asked for elaboration on SB 758
    • The manufacturing equipment provision in the bill would provide meaningful tax relief and incentivize business investment
  • Sen. West asked if deferred maintenance for infrastructure should be addressed before tax cuts
    • It’s certainly a priority
  • Sen. Watson stressed that Texas doesn’t have a business income tax which overshadows franchise and property taxes
    • All we are asking for is a proportional tax rate
  • Sen. Huffman asked how Rivero feels about the proposed franchise tax exemption and the large number of small businesses it will allow to circumvent the franchise tax
    • We support a broad franchise tax base that allows low rates
  • Sen. Nichols would like for the comment panel to figure out how much it costs for small businesses to administer and oversee franchise taxes
  • Sen. Seliger asks for a reflection on property tax
    • Businesses are not saying we can’t invest, in fact our companies are proud of their relationship with the State and schools
    • Property tax is not unfair, but if there is going to be relief it should target property tax
  • Sen. Bettencourt what consequences tax policies have given investments in other states
    • Things like the 10 year 100% property tax abatement in Louisiana do have an effect, larger in investments in Louisiana over Texas. Chapter 13 tax agreements make Texas an attractive choice

 
Patti Quinzi, Texas Chapter, American Federation of Teachers

  • Before State considers enacting any new tax breaks, urge State to consider its obligation to fund schools adequately
  • Funding for many different education programs is “woefully insufficient”
  • Cover State obligations first and only after this consider tax cuts
  • Sen. Nelson asks if teachers would like property tax relief
    • Yes, but salary increases would be better
  • Sen. Nelson asks if teachers understand why healthcare costs have increased dramatically
    • State only provides $75 dollars to support healthcare costs

 
James LaBaugh, Texas Chemical Council, Texas Assoc. of Manufacturers, two others

  • Mining and Oil and Gas tax revenue is very high, uneven collection
  • Real problem is property tax

 
Will Newton, Executive Director, National Federation of Independent Businesses/Texas

  • Only commenting based upon ballot choice from the membership
  • Franchise tax SB 105, 138, NFIB member ballot called for a full repeal of franchise tax
  • SB 8 is very beneficial to small businesses
  • SB 7 provides relief important to all businesses, large or small
  • Relief would go to hiring new employees, equipment purchasing, job creation, debt payoff

 
Brent South, Hunt County Appraisal District, Texas Assoc. of Appraisal Districts

  • SB 1, July 25th deadline for LBB to publish, this date will not allow TAAD to meet statutory requirements
  • Statue requires kind and amount of partial exemptions, which will not be available by July 25th
  • April 30th preliminary estimate requirement difficult without knowing what homestead exemption is
  • July 25th appraisal tax certification also difficult without homestead exemption

 
Christy Rome, Executive Director, Texas School Coalition

  • Wish to keep as much local tax revenue in local pockets as possible
  • Urge to protect both the interest of taxpayers and students
  • Does not want tax relief bill to cause INS increases
  • ASATAR funding lost in 2017 so it is important to remind people of 2024 homestead deadline
  • SB 1 Texas constitution change would benefit taxpayers, but also carries a cost

 
Cynthia Hayes, Executive Board, AFSCME Texas Retirees

  • Request that Senate addresses long term health of ERS fund, making actuarially sound, and consider putting in front and center of Senate discussions
  • Failing to do so would increase costs and erode State credibility

 
Brian Slayton, against Franchise Tax

  • Repeal tax completely
  • No income tax in State, but businesses losing money must still pay franchise tax

 
Sen. Nelson, Workgroup Announcements

  • Workgroup on Facilities
    • Kevin Eltife – Chair, Kelly Hancock, Kel Seliger, Kirk Watson, John Whitmire
  • Art. 1, Art. 4, Art. 5
    • Joan Huffman – Chair, Lois Kolkhorst, Kelly Hancock, Juan Hinojosa, John Whitmire
  • Art. 2
    • Charles Schwertner – Chair, Paul Bettencourt, Lois Kolkhorst, Larry Taylor, Carlos Uresti
  • Art. 3
    • Larry Taylor – Chair, Kelly Hancock, Joan Huffman, Kel Seliger, Royce West
  • Art. 6, Art. 7, Art. 8
    • Robert Nichols – Chair, Paul Bettencourt, Kevin Eltife, Carlos Uresti, Kirk Watson
  • Juan Hinojosa and Jane Nelson overseeing

 
Texas Retailers Association

  • SB 7, match increases in homestead exemptions with similar reductions
  • For companies below $1 million threshold, SB 7 provides no benefit
  • Urge to reduce or eliminate business inventory tax
  • Inventory tax is the one significant negative feature for companies looking to expand into Texas
  • Would provide relief to businesses large and small and foster growth in Texas

 
Maria Crickler, Travis County Appraisal

  • SB 1, problems with the deadlines of appraisal estimates, look at changing the date, similar to other appraisal district complaints
  • Implementation in 2015 for SB 1 is a very tight schedule, software vendor said 2 months minimum or 3 months preferred for software implementation
  • 2016 is a more reasonable timeline for implementation
  • SB 768, would like some consideration for the ability of appraisal district to prevent fraud
  • Hinojosa comments that he has a bill dealing with the SB 1 dates

 
Tony Bennett, Texas Association of Manufacturers

  • 500 companies from nearly every manufacturing sector in Texas
  • TAM pledges to work with Senate to bring balanced tax relief to homeowners and businesses
  • Key areas: heavy property tax burden on industry, lengthy environmental permit process, workforce skills gap, inadequate water and transportation infrastructure
  • Key issues before committee, SB 1 indexing feature, in favor of SB 7 franchise tax rate cuts, strongly opposed to removing any more business taxpayers via SB 8, both SB 516 and 768 would move Texas more in line with competing states
  • Sen. Hancock comments that stagnant rate on homeowners property tax rates drop revenue, and asks if industry is complaining about tax rates on industry while ignoring similar effects happening in home property sector

 
George Allen, Texas Apartment Association

  • Would prefer an approach to tax cuts that focus on relief for all property owners
  • SJR 1 ban on real estate transfer tax is very much appreciated
  • SB 7, urges a proportionate lowering of the E-Z rate as it is simple for businesses
  • E-Z rate cut would benefit property renters greatly

 
Kelly Flanagan, Texas Association of Realtors

  • 95,000 members
  • Support SB 1 and SJR 1, both provide meaningful tax relief to homeowners in Texas
  • Property taxes are becoming a burden for many homeowners
  • Support SJR 1 as it would prevent a new sales or transfer taxes

 
Talmadge Heflin, Texas Public Policy Foundation

  • Supporting SB 1 and SJR 1, both a step in the right direction
  • Good to see not just talk, but action this session that will help property owners
  • These steps keep up with rising values

 
Donald Lee, Texas Conference of Urban Counties

  • SJR 1 schedules an election in September, counties have not budgeted an election at this time
  • In the past, the Senate has allocated funds to help hold these elections
  • Urge to help counties fund election in September

 
League of Women Voters of Texas

  • LOWV supports an equitable tax rate, lend their voices in support of those who have urged caution in assessing tax cuts before budgetary requirements for schools etc. have been decided

 
Selena Moreno, Mexican American Legal Defense and Education Fund

  • Funding for ESL students and underprivileged learners is currently inadequate, not keeping pace with current need
  • Premature to eliminate or reduce franchise tax, an important mechanism to fund public schools
  • $387 million dollars will be shared with companies with $10 billion or more in receipts, with this in mind it is time to support students as well

 
John Carlton, Texas State Association of Fire and Emergency Districts

  • 300 districts in the state
  • Supporting SB 31, which expands the fundraising capability of volunteer services

 
Peggy Venable, Americans for Prosperity in Texas

  • Support repeal of the franchise tax, appreciate Senate commitment to significant tax relief
  • Support a phase out of the franchise tax, and support as much relief as possible for Texas businesses
  • Sen. Kolkhorst asks for an explanation of the rates that overtook prior property tax relief
    • Hiding behind appraisals, as appraisals went up rates were not lowered
  • Sen. Bettencourt asks if Americans for Prosperity are in support of other tax relief measures
    • Mostly interested in the roll back rate of franchise tax
  • Sen. Hancock comments that the money returned to “needy” families in the state by the current property tax relief schedule are significant

 
Chris Barron, Firefighters Association of Texas

  • Supporting SB 31, helping volunteer fire departments in fundraising

 
Vance Nguyen

  • Supporting SB 105, eliminating margin tax entirely
  • $5 billion businesses are paying in taxes are coupled with compliance costs in burdening businesses
  • Burdens consumers as well via higher prices and reduced wages
  • Sen. Nichols asks what the compliance cost would be
    • No specific number for that amount, in models imputed amounts help forecast economic effect
  • Sen. Taylor notes that 2012 revenue exceeded forecasts
    • Minimum forecast lowered due to recession in that time period

 
Josiah Neeley, Texas Director, R Street Institute

  • Texas margin and franchise tax is a failed experiment
  • Original goals were fairness, broad application, modernity, understandability, and no harm to competitiveness of state, tax has failed on all counts
  • Immediate repeal of margin tax would be great benefit to Texas consumers
  • Sen. Nelson asks if he has heard how much eliminating tax would cost Texas
    • Revenue from tax has been falling over time
  • Sen. Nelson asks how he would come up with the 9.4 billion estimated loss with repeal of the tax
    • A lot of money coming in, and limits to spending growth would compensate
  • Sen. Hancock suggests a voluntary out that escalates based upon revenues, i.e. rather than paying an accountant to figure out taxable amount, there would be a tiered approach for businesses taxation, asks if this is possible
    • Something like this has a real potential to deal with complexity and indirect cost, would still favor complete elimination

 
Ed Banino, Deputy CFO, Austin

  • Support SB 279, would provide local authorities with a new tool for tax relief through exemptions
  • Only provides a tool, does not force taxations schemes on localities
  • SB 279 offers a great deal of flexibility for appraisal
  • Percentage based exemptions are very costly, much too general

 
Dan Casey, Fast Growth School Coalition

  • 85 School districts, 80% of school enrollment each year
  • In the case of major school districts there is no longer any offset for INS taxes, reimbursement inadequate

 
Bill Longley, Texas Municipal League

  • Opposing SB 516, 768, 763
  • SB 516, once a city adopts Freeport exemption they are locked into that exemption, cities bought into exemption thinking it provided certain benefits, but those benefits have now changed
  • Current tax relief exemptions make sense for some cities, but not necessarily for all cities
  • Sen. Schwertner would hope that municipalities would look at tax relief as a benefit, strongly recommend looking at business growth as beneficial and reconsider position on Freeport. Business inventory relief is beneficial for everyone

 
Jake Posey, Bell Helicopter and Support

  • Global 10,000 employees, 8,000 local
  • Supporting SB 516
  • Sen. Bettencourt asks if optional relief has been granted yet
    • Some tax relief jurisdictions has granted it
  • It would be easier if all jurisdictions implemented this
    • Yes, from an efficiency standpoint
  • Comments that he would love to have such a manufacturing facility in his district, lowering business inventory tax would help such businesses and localities

 
Steve Bresnen, Bingo Interest Group

  • Amendment to SB 759, Support 3% tax paid on bingo hall rental elimination, but worried that this could increase licensing fee
  • Recommendation to review state lottery and bingo, State portion of tax on prizes be eliminated and require a mandatory charitable contribution to the bingo fund for charitable purposes

 
Gary Miles, HCA

  • Support SB 687, corrects the unequal treatment of current healthcare providers
  • Would allow all healthcare providers to exclude 100% of government programs for franchise tax calculations

 
Chris Rosas, Rackspace

  • Support SB 755, software purchased for internet hosting would be taxed once, not twice
  • Would address ambiguity in law subjecting software to sales tax
  • Other states do not impose this taxation

 
Michael Cosentino, City Attorney, San Marcos

  • Address SB 744, modifies code allowing San Marcos officials to be free from technical necessity to proclaim increased tax rates

 
Deborah Cartwright, Harris County Appraisal

  • Supporting SB 762, increased exemption of tangible property used in generation of personal income
  • Sen. Bettencourt comments that anything saving the public, the State, and businesses money is good policy

 
 
James Welch, VP, Texas Chiropractics

  • Support SB 765, eliminating $200 occupation tax
  • This tax was supposed to be temporary, but it is still in effect
  • Levied as these occupations were not subject to old franchise tax rate
  • Sen. Nichols asks if this tax was dedicated to a certain area
    • This goes to general funds
  • Sen. Nelson comments that in essence the occupation tax hits certain occupations twice

 
Dennis Borrell, Coalition of Texans with Disabilities

  • Sees decreasing general revenue, and would like Senate to have the use of full general revenue
  • House Appropriations has refused certain DARS program funding even with the high funding this year
  • Perhaps sales tax reform focused on the modern service based economy
  • $200 comment, insignificant and petty to consider cutting
  • SB 31 is long overdue and very helpful to the volunteer departments all over the State
  • Sen. Nichols comments that occupation fee and franchise fee is not fair to those businesses falling below certain thresholds, wants to avoid double taxation, but perhaps occupations tax alone is not unfair
  • Sen. Bettencourt comments that $200 occupations fee is very important to members of the public and shouldn’t be dismissed out of hand
  • Sen. Watson agrees that $200 is a lot of money, important to recognize the trade-offs when considering tax relief

 
Stuart Greenfield

  • SB 1, 7, 8, etc. look at dropping the sales tax rather than focusing on property tax relief