$5 Billion Found in the Senate Couch Cushions [Updated]

"This is a one time fix," says Sen. Robert Duncan of his list of potential revenue.

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I co-wrote this blog post with Alexa Garcia-Ditta.

Update April 20, 7 p.m.: The Senate Finance Committee passed Sen. Robert Duncan’s bill on “non-tax” revenue by a vote of 13 to 2. Republican Sens. Dan Patrick and Jane Nelson were the only two “no” votes on the commitee. Patrick said he will vote against the bill on the floor as well unless they change the measure that speeds up business tax collections.

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After weeks of searching the couch cushions, the Senate finally revealed what it had found. Tuesday, Sen. Robert Duncan, R-Lubbock, revealed his long-awaited list of non-tax revenue ideas to help balance the Senate version of the budget this afternoon. The list totaled almost $5 billion in extra revenue.

The Senate has been on a search for ways to avoid drastic budget cuts to state programs like Medicaid and public education. Struggling with a $23 billion budget shortfall for the 2012-2013 biennium, the House opted to rely almost entirely on drastic cuts to balance the budget; some House members openly hoped that the Senate would provide less harsh solutions to the budget crisis.

To find alternatives to cutting, Senate Finance Committee Chair Steve Ogden tasked Duncan with a subcommittee on Fiscal Matters and charged it with finding $9 billion in extra revenue. They made it more than half-way there. Duncan released a list of 20 revenue-generating measures, totaling about $4.2 billion. All of those measures would need additional legislation to be implemented. Some of the items are simply accounting tricks—the single biggest provision would put off payments to public schools and save almost $2 billion. Another measure would tax small cigars at the same rate as regular cigarettes. Tax collections for the sales tax and the business tax would speed up, yielding a total of over a billion dollars.

In addition to the 20 items, Duncan also said he has an additional list of ideas that total about $600 million, although he didn’t release those ideas. The bill, SB 1811, will include all the measures, although the committee will vote on each one individually Wednesday.

But the measures would not do anything to address the state’s long term tax problems—namely that the current tax structure doesn’t yield enough to support the state’s costs. “This is a one time fix,” Duncan told reporters after the committee hearing on his bill. “This does not solve our long term budget crisis—or problems,” he said, correcting his word choice.

Duncan told the committee that some ideas have already been filed as bills in either the House or the Senate, and other solutions have been used in the past to address severe budget shortfalls. Even with the new money, the Senate is still probably short of the funds it would take to fund education and health care at the levels senators would like. 

“This is a large step towards funding those priorities,” said Duncan. “I wish we had more revenue.”

Still, the senator remained optimistic about finding budget solutions so that schools and hospitals didn’t feel the budget crisis too harshly.. “At the end of the day, we’ll have to see how short we are,” he said. “The good news is it’s April.” It’s also only 40 days until the end of the legislative session and the Senate Finance Committee has yet to vote on a budget bill. 

 

Here’s the complete list with how much money each item will generate over the biennium:

  1. Foundation School Program payment deferral from August 2013 to September 2013, $1.8 million

  2. Sell 11 underused state properties, none of which have people living in them, $35 million

  3. Custom Brokers Stamp fee, $1 million

  4. Repeal Economic Development Tax Refund, $10 million

  5. Eliminate Hotel Permanent Resident Exemption used by airlines and oil companies, $10 million

  6. Speed up the state’s ability to absorb unclaimed property to help certify the budget, $316 million

  7. Reclassify Court of Criminal Appeals Training Fund, $5.3 million

  8. Process Server Certification Fees, $1.5 million

  9. Petroleum Delivery Fee Continuation, $59.2 million

  10. Motor Fuels Speed-up and the delay of motor fuels tax transfer to fund 6 and 2, $273 million

  11. Alcohol Tax Speed-up, $12.5 million

  12. Reduce Cigarette Tax Stamping Allowance, $47 million

  13. A fee on small cigars, which would tax small cigars like cigarettes (Right now, the tax on a pack of cigarettes is $1.44) $25.1 million

  14. Sales for Resale Fix, $200 million

  15. Eliminate CPA Audit Responsibilities of Office of Court Administration, $9 million

  16. Franchise Tax speed-up, which would require businesses to pay 25 percent of their franchise tax earlier than the due date, $880 million

  17. Sales Tax speed-up, $200 million

  18. Alcoholic Beverage Reporting, $25.8 million

  19. Tobacco Earnings for CPRIT debt service, $100 million

  20. ERS GBP Agency Enrollment Fee, $165 million

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