Congratulations to the Dallas Morning News on winning the Pulitzer Prize for Breaking News Photography for its coverage of Hurricane Katrina. The Morning News' coverage of the entire Katrina story, print and photography, was magnificent and the prize is well deserved.
Cloyde W. Pinson as a young soldier.A fellow veteran remembers his friend, Cloyde W. Pinson.
I want you to know the man it has been my honor to have known and worked with as fellow board members in the Military Order of the World Wars, in VFW, and most of all, during the time leading up to the opening of our national cemetery. It is difficult to imagine the bureaucratic meddling that was involved by those primarily interested in getting credit for it, or maybe just in throwing their weight around, poor and slow management of contracts, etc. Cloyde just rolled with the punches, found ways around the road blocks, patience beyond my understanding for sure --- just a single goal in mind.
He had spent 21 years on active duty beginning as an army private in 1941, switching to the USAF when it was formed in 1947, working his way up to a direct commission, retiring as a captain. He had lost his Marine son in 'Nam. He KNEW the importance of a proper site for burial for those that have served their country. Oh, yes, eventually we'd have a national cemetery in this area; but, because of his tireless efforts, skillful diplomacy, and endless determination, now it is done.
Under most circumstances, you are not allowed to select your site of burial in national cemeteries. I understand that the VA is reconsidering that policy and will inter Cloyde next to his son.
Texas Comptroller Carol StrayhornIt is the opening day of the special session and the biggest cannon fired so far is by State Comptroller and gubernatorial candidate Carol Strayhorn. The Comptroller announced that the state’s surplus has now risen to $8.2 billion - $5.9 billion in new money.
Strayhorn also presented what she termed as “Strayhorn Solution” that she claimed could add $7.7 billion in savings that would be available for spending on increased teacher pay, the Texas Children’s Health Insurance Program and on building up the state’s largely depleted Rainy Day Fund.
The steps included reinstating the e-Texas Performance Reviews and the Texas School Performance Reviews by her office (the reviews were stripped from the Comptroller’s office by the legislature) which Strayhorn promised would provide a minimum of $3 billion in savings available for additional spending or tax cuts.
Strayhorn also called for video lottery terminals in race tracks where gaming has already been approved. She estimated that if the change were implemented in the special session it could add $2 billion in new money for the next biannual budget.
While Strayhorn has opposed changes to the state’s franchise tax proposed by her Democratic predecessor John Sharp and embraced by her foe Gov. Perry she did call for closing loopholes in the tax which she projected would add another $1 billion.
Finally, Strayhorn called for abolishing the Texas Enterprise Fund and the Texas Emerging Technology Fund and redirecting the $300 million remaining in those funds to other needs. Strayhorn has called those funds as a “slush fund for the governor.”
In effect Strayhorn is now saying that the legislature can buy down the local property tax cap thereby avoiding a court ordered shutdown of the public schools, provide substantial property tax relief, increase teacher pay by $4000 per year, and restore cuts to popular health care programs.
Gov. Perry will address the special session later today and is expected to lay out his full program.
Pushed higher over concerns about possible military action in Iran, a growing insurgency in Nigeria and low gasoline supplies in the US the price of oil reached its highest point since Hurricane Katrina when the price hit $70.85 per barrel.
Tax Reform Commission chairman John Sharp went calling April 10 on the House Ways and Means Committee, hoping to sell the new business tax plan. If he didn’t clinch the deal, at least no one slammed the front door in his face.
A few committee members voiced concerns to Sharp, who, with commission staffers James LeBas and Karey Barton, laid out the full proposal. Chairman Jim Keffer (R-Eastland), nevertheless, in a post-meeting assessment, said, “I think the majority of members I’ve talked with are very positive on what they’re hearing from Sharp.”
Among questions and concerns raised by members:
*Lack of tax credit for medical services. In the current proposal there is no system of credits for medical providers with high volumes of government-funded care like Medicare and Medicaid.
“The biggest concern and void that I see… as far as the medical community is concerned,” Keffer said, “is some kind of a Medicaid/Medicare credit we did look at in House Bill 3. I realize that’s a Pandora’s box all by itself, but somehow I certainly would like to see in the mix of conversation something along those lines.”
Sharp said the commission had offered to work with the medical community; however, the Texas Medical Association (TMA) wouldn’t go along with any measure that brought doctors under the franchise tax.
According to Sharp, the committee considered a proposal to include a 150 percent deduction for Medicaid and a 100 percent deduction for uncompensated care. The proposal failed, however, 8-9, because the commission could not get the support of the TMA. LeBas, the commission’s financial analyst, added that the commission is currently working on a provision to address lawmakers’ concerns.
* Do the numbers balance? Rep. Michael Villarreal (D-San Antonio) expressed concern over whether the business tax will grow enough to cover the loss in revenue by the proposed property tax cut.
“The first concern has to do with how this tax package in its entirety will grow relative to the tax cut that we’re going to be paying for,” he said.
LeBas said that the plan predicts there will be a 6 percent growth rate in the new business tax that will generate enough money to buy down property tax rates. He also said the commission is waiting on the Comptroller’s office to release the fiscal note on the Perry-Sharp plan.
“Let’s make sure that this total package is balanced two years, three years… down the road,” Villarreal said. “Particularly when you consider it doesn’t account for the cost of local enrichment, delivering to school districts a guaranteed yield on their new local enrichment. It doesn’t take into consideration the growth in annual student population of 2.2 percent. All these things will create more pressure on our state budget, and if the package just pays for the property tax we’re still kind of sunk, because as you know, we’re creating meaningful discretion at the local level, thereby incentivizing them to increase their property taxes because we’ll match their dollars generated.”
Rep. Vilma Luna (D-Corpus Christi) voiced similar concerns over running a deficit in the future. “Even with the natural revenue growth that you are projecting,” she said, “and with all the assumptions that are rolled into that, potentially we have a situation…where we’re going to be running at a deficit for a period of time and if that is the decision we make, then that’s the decision we make. But I think we all need to be well informed of that as we move forward.”
“You won’t be running at a deficit,” Sharp countered. “You’ll be using revenue growth to cover it.” Sharp explained that the commission is counting on mainstreaming a portion of the surplus into the future revenue base.
* How does the plan affect Robin Hood? Such was Rep. Mark Homer’s (D-Paris) question to Sharp concerning the present obligation of property rich school districts (commonly referred to as Chapter 41 districts) to return money collected from local taxes to the state for redistribution to school districts considered property poor.
“We’re not getting rid of Chapter 41,” said LeBas. “The amount of recapture will go down because the tax rate will go down…if you’re subject to recapture today, you’d still be subject to recapture in this bill… it doesn’t repeal recapture.”
* Why are some industries taxed at ½ percent rather than 1 percent? In the Perry-Sharp plan, most businesses are taxed at one percent, whereas retailers, wholesalers and restaurants are taxed at ½ percent. That’s because retailers and wholesalers typically operate under a smaller profit margin.
“As I understand, different types of businesses have varying degrees of profit margin,” said Rep. John Smithee (R-Amarillo). “For example a grocery store typically has a small profit margin. On the other hand a jewelry store has a very high margin. So the question is why is it fair to lump all of the retailers together in the same tax rate?”
Barton, the commission’s tax director, said it would be an administrative nightmare to assign different tax rates to different retail categories. “It’s an administrative issue more than anything else,” Barton said. “If you’re going to choose to provide for the classification of rates you needed a way to classify those in a way that’s administrable and going through and trying to pick and define individual types of retail trade would have been very, very difficult to do.”
* Why are some entities exempt from taxation? In addition to exempting sole proprietorships, general partnerships with direct ownership and non-profits for the tax, the plan also excludes “passive entities” – typically, limited partnerships or trusts that receive most of their income from dividends, interest, and royalties. Why? asked Smithee.
“If you’ve got a limited partnership that owns some strip centers or apartments, we would tax that under the bill,” LeBas said. “But if a REIT [real estate investment trust] then holds the interest in those limited partnerships it wouldn’t make sense to tax it a second time when it taxes through a REIT. So that’s the basic structure. Tax the active business but don’t tax it a second time when it changes hands.”
“I just think in all fairness,” said Smithee, “I don’t know why you take non-operating working interests out of this. It’s different from royalties. You’re talking about some entities that are tens of millions of dollars. You’re just cutting them out of the whole economy of this tax bill. If we’re going to do that, that’s fine, but let’s don’t call it a broad-based tax bill, because it’s not. Because we’ve taken [out] a major segment of the Texas economy.”
* Are start-up companies exempt from the tax? No, it’s not in the bill. However, LeBas told committee members that they have asked Legislative Counsel to look at model language to insert in the bill that would allow exemptions for start-up companies with more than $300,000 in total receipts. LeBas said that several states have exemptions for start-up companies. The commission is considering exemptions for any bona fide new business that had a net negative margin position for two years and revenues not greater than $5 million.
* Why aren’t the franchise tax credits in the Perry-Sharp plan? Tax credits for certain investments, jobs, R&D, capital investment, day care, enterprise zones and defense readjustment zones were eliminated in the plan. Under the plan, companies will not be able to continue to earn the credits, unless they have a written contract with the state.
“What’s the rationale for not allowing them [tax credits] to stay in the code or under this new business tax?” asked Luna.
Barton said the Legislature could decide whether to go on providing for those credits on an ongoing basis.
Sharp is scheduled to present the new tax plan on the House floor April 17 or 18. Keffer, who called such an event “fairly out of the ordinary,” said, “We’re making sure everybody knows we’re taking it seriously. Where it goes from there, I don’t know. We certainly want to give it every effort and opportunity…
General ZinniNewsweek and Time have major stories in their current issues of their magazines discussing the reasons why so many retired Generals have called for the resignation of Secretary of Defense Donald Rumsfeld. You can read the Newsweek story by linking here and the Time story by linking here.
According to Newsweek, the revolt began when retired Marine General Anthony Zinni wrote an op-ed in which he called the Secretary of Defense "incompetent strategically, operationally, and tactically." What is not mentioned in the Newsweek story is that Gen. Zinni is a close associate of former Secretary of State Colin Powell. Zinni was extensively involved in policy planning and negotiations in the Middle East both as an active duty officer and as an adviser to the Secretary of State after his retirement from military service. In the Time story, Gen. Zinni is quoted as suggesting that the retired generals are not just speaking for themselves but also for other active duty officers: "I think a lot of people are biting their tongues."
Meanwhile, the Pentagon attempted to come to the defense of the beleaguered Secretary of Defense by sending out a memo to retired military leaders calling on them to come to the defense of Don Rumsfeld. One who did was Richard Myers, retired chairman of the Joint Chiefs of Staff. He said that was "inappropriate for the military to sit in judgement of their civilian bosses."
Obviously, the public call for Rumsfeld’s dismissal makes it difficult for President George W. Bush to take action, even if he were so inclined to fire him – and there is no evidence that such is the case. Thus, the question becomes: Has Rumsfeld become such a liability to the President that the Secretary concludes it is time to go and leaves on his own?
Tom DeLay made a hard call on the political front recently because he concluded that he was in a "no-win’ situation. Will Don Rumsfeld come to the same conclusion?
Our buddies at the Dallas Business Journal send word that the city is actually still in the running for the godawful Dallas movie.
A movie scout is in Dallas for seven days to check us out. Which is appropriate, given the preliminary cast list that includes John Travolta, J Lo and Owen Wilson, because seven days is the likely length of the film's theatrical run.
The Dallas City Council will look at banning repeat parking offenders from renewing their vehicle registration, although it raises the question that vehicle registrations are a county, not city function.
Other measures to try to collect $40 million in back parking fines going back to 1986 include towing repeat offenders, posting names on the city's web site, suing those who owe more than $1,000 and disciplining city employees who don't pay.