The franchise tax came into existence in 2006 and was trouble from the start. Businesses hated that it taxed their gross receipts instead of their profits, meaning they would pay the franchise tax even if they didn’t earn a profit. Worse, the tax never brought in as much money as promised for Texas schools, falling $4 billion to $5 billion short every year. That has left Texas with a ongoing budget hole every year since.
Lawmakers took on the troubled franchise tax yesterday when HB 500 hit the House floor. Their response to the tax’s flaws? Tax cuts!
As the Observer’s Patrick Michels writes, the House stuffed HB 500 with $667 million in tax breaks for small businesses, including $270 million in tax reductions added through amendments during the floor debate, as House members moved to give tax breaks to businesses in their districts. The bill, which also contains sweeping tax reform changes, passed on a preliminary vote. It’s expected to win final House passage today.
The measure still faces significant opposition in the upper chamber, the Texas Tribune reports, as some senators fear that the bill is too costly. Some House Democrats made that point on the House floor yesterday, wondering why lawmakers would pass tax breaks when the franchise tax already doesn’t supply the state with the money they expected in 2006. Rep. Yvonne Davis (D-Dallas) called it, “a pork barrel add-on attempt to get money for your special interests and special projects.”
1. Yesterday, Rep. Eddie Lucio III (D-Harlingen) brought to the floor House Bill 887, which would create a pilot program for public schools football players to obtain concussion insurance. The bill passed, but Lucio said that it stops short of the protections he had hoped for when drafting the legislation. The bill originally would have limited full-contact football practices to prevent brain damage in players. The Observer‘s Beth Cortez-Neavel has more details.
2. Rep. John Zerwas declared what had already become obvious: Medicaid expansion appears dead this session. Zerwas told the Dallas Morning News that his bill to create a “Texas solution” to expand Medicaid under Obamacare is finished.
3. Speaking of Obamacare, Dr. Steven Hotze, a GOP activist and donor, has decided that one U.S. Supreme Court battle over the health care law just wasn’t enough. He announced yesterday that he plans to file suit against Obamacare. Good luck with that.
Line of the Day:
“It had an $8 billion hole in it when we passed it. It never performed the way they thought it was going to perform, and what we’re doing today is not fixing that problem. This has become just a pork barrel add-on attempt to get money for your special interests and special projects.” —Dallas Democrat Yvonne Davis on the business tax breaks in HB 500.
What We’re Watching Today:
1. Rep. Mike Villarreal (D-San Antonio) and Sen. John Carona (R-Dallas) are holding a press conference today to call for the House to pass Senate Bill 1247 (the payday lending reform bill).
2. The House will be churning through as many bills as possible ahead of tomorrow’s deadline to pass House bills. The House has a full calendar, including HB 741, which would require government entities to make “reasonable accommodations” for their employees to pump breast milk at work.