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by Mike Fisher    Tue, Mar 21, 2006, 10:42 AM

I guess the weekend topper for me -- "the cherry on the pie,'' as Malaprop Michael Irvin now calls it -- was my friend Dale Hansen's treacly late-Sunday commentary on Channel 8, the one that painted T.O. as the Ultimate Insult To What The Cowboys Have Always Stood For. Assorted takes from atop Mike Fisher's barstool in the "School of Fish'' ...

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by    Mon, Mar 20, 2006, 11:47 PM

Comptroller Carole Keeton Strayhorn and Democratic nominee Chris Bell both held news conferences today calling for larger teacher pay raises ($4,000 across-the-board in Strayhorn's case). "To ensure our state’s economic prosperity, we must recruit, reward and retain highly qualified and experienced teachers who are fully certified, well paid and dedicated to a lifelong career with our most precious resource – our children," Strayhorn said. A link to Strayhorn's report is posted below.

Perry spokesman Robert Black called on Strayhorn to release a fully-funded school finance plan. "All Texans have ever gotten from Chris Bell and Carole Strayhorn is promises without pricetags and plans to pay for them," he said.

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by Trey Garrison    Mon, Mar 20, 2006, 11:03 PM

Okay, I think the Startlegram blew it on this story, that relates a really shoddy study purporting - wrongly - to show that energy deregulation has caused energy prices to go up instead of down.

The Startlegram isn't to blame, per se, but they report this study barely questioning it. And this is not to endorse or disparage energy deregulation, but rather to point out the flaws in the study the paper reports on.

The paper states: "Under electricity deregulation, Texans have paid some of the highest rates in the nation -- a reversal of at least a decade of relatively cheap electricity under the state's old regulated system. That's the conclusion of a national utility expert, who also reports that those in deregulated states typically have had larger rate increases than customers in states still under regulation."

It goes on to note that: "In 2004, the typical Texas residential customer paid an average of $96.00 per month, compared with the national average of $89.40."

Leave aside the meaningless comparison of average Texas household to the national average - should be a given that Texas households would use more energy given how hot it gets. And it's telling that they quote average monthly bills instead of the cost per kilowatthour.

What's really notable is what remains unsaid in the article: Something like more than four out of five households in Texas still buy electricity at the regulated rate.

So how that establishes that deregulation is the problem is, well, beyond me.

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Bill DeOre
by Scott Bennett    Mon, Mar 20, 2006, 10:50 PM
billdeore-20060319-1942 2.jpg
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by Special to    Mon, Mar 20, 2006, 05:00 PM

Texas Right to Life has issued its scorecard for the 79th Legislative session. Copies are attached in PDF forms.

House vote scorecard

House leadership scorecard

Senate leadership scorecard

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by Trey Garrison    Mon, Mar 20, 2006, 04:15 PM

Readers raised concerns over the weekend about how unusually heavy rainfall like we just had could affect the viaduct and the whole Trinity River Corridor project. One noted that if the engineering is off, it could flood a large area from Regal Row all the way to South Dallas.

We turned to the woman who knows the answer better than anyone else - Rebecca Dugger, director of the Trinity River Corridor Project for the city of Dallas.

"We're working closely with the Corps of Engineers and we can't do anything without their blessing. One of their first priorities is constructing the chain of wetlands downstream so that all the water that collects in the river basin is released downstream - basically we're unstopping the dam," Dugger said. "So far we've cleared about 80 or 90 acres to make the wetlands chain, and the result is that thus far the flood level in the downtown area is already down by more than a foot."

It gets better.

"The levees as they stand now would protect us from a 300-year flood. When we're done with this whole project, from the levees down to Loop 12, we'll have protection from up to an 800-year flood," Dugger said.

And just for perspective, she noted, the Corps of Engineers gauged the weekend's rainfall that deluged Dallas. The verdict? It represented a five-year flood.

Find out more about the Trinity River Corridor Project right here.

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by Carolyn Barta    Mon, Mar 20, 2006, 03:20 PM

Dallas lawyer Michael Boone is on target in his op-ed in today’s DMN about the need for more state funding for public schools. In the last 25 years, state funding has gone from 52 percent 35 percent now, while the local share has gone up from property taxes. Boone correctly notes that a broad new business tax is needed to provide adequate revenue.

As he says, there is a major disconnect between the tax system and economy of Texas. Service industries that account for more than half of the state’s economy fail to bear their share of the tax burden. Strong lobbyists for special business interests have created loopholes and exemptions in the current franchise (business) tax.

Simply using the current $4.3 billion surplus to buy down local property taxes -- since most districts are at the state-imposed $1.50 cap -- will only be a one-time fix. Schools will continue to need more funds to meet the growing student population and keep up with inflation.

Boone is a former president of the Highland Park School Board. He has studied and worked on school finance issues for several years as a citizen-leader. He is knowledgeable. And he’s right – about what the Legislature needs to do to fix the school funding system for the long term.

Texas needs a major new state tax that grows with the state's economy, i.e. a broad base business tax.

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by Tom Pauken    Mon, Mar 20, 2006, 01:48 PM

Clay Robison has an interesting column in Sunday’s Houston Chronicle on how influential big money has become in politics and how it makes a difference in the decisions made by public officials. In this case, Robison cites the example of Comptroller Carole Strayhorn who "has received almost $900,000 in political support since 2001 from Dallas tax consultant George Brint Ryan (Ryan & Co.) or his company’s political action committee." As Robison points out, "Ryan’s firm represents clients with tax disputes before the comptroller’s office."

The Houston Chronicle columnist goes to cite a state audit of Strayhorn’s office a few months ago which "reported that Strayhorn’s agency had reduced tax bills by $461 million for companies, including same represented by Ryan & Co., that settled tax disputes within a year of contributions to the comptroller’s political campaign."

Wonder how "tough" the Grandma was on her contributors who had tax disputes before her agency?

To read Clay Robison’s complete column on the "high-dollar game of Texas politics", link here.

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by Special to    Mon, Mar 20, 2006, 12:44 PM

The Senate Finance Committee this week took a hard look at the sales and use tax, searching for ways to increase efficiency ahead of a likely special session on school finance.

The biggest issues under the committee's microscope were exemptions and exclusions to the sales tax. Senators wanted to know what the exemptions were, how narrowly they were defined, and how strongly they were enforced.

"The obvious question is, before we start coming up with new methods of taxation, how well are we doing on current ones and current statutes?,`" said committee chairman Steve Ogden (R-Bryan). Ogden directed his comments at representatives from the state Comptroller's office.

Although the comptroller's representatives could not point to any specific studies on efficiency, Director of Tax Administration Mike Reissig said evidence indicates a high degree of it.

There are four types of sales tax exemptions, based on:

  • The status of the purchaser: governmental units, non-profits, etc.
  • The status of the seller: occasional activities, such as garage sales.
  • Use of the item: agricultural items and items to be used in manufacturing.
  • Nature of the item: food, water, medicine, etc.

Thirty-nine per cent of exempt items, including gasoline and insurance premiums, are subject to other taxes. The next largest percentage – 35 – covers items used in manufacturing. Taxing such items would amount to double-taxation.

Among the remaining exemptions - those commonly thought of – the largest are food ($1.4 billion) and utilities ($1.2 billion, although some utilities are taxed under certain conditions).

Ag Exemption

Senators fretted particularly over the agriculture exemption: not wanting to eliminate it but worrying over its possible abuse. The exemption costs the state an estimated $321 million a year.

Like land used for agriculture, hence exempted from property taxes, purchases for agricultural use have historically enjoyed sales tax exemption. The exemption applies not only to implements and seed, but to many other products used in farming or ranching, such as tires for farm vehicles.

Making such a tax work, however, is not easy. The same product can be exempt or not, depending on actual use. A small lawnmower-type tractor can be exempt from sales tax if used, for example, for spraying pesticides. However, if used for mowing the farmer's yard, it isn't.

Moreover, there is no actual definition of who is involved in agriculture and who isn't. That consideration is becoming increasingly important in rural areas adjacent to urban centers, like Sen. Bob Deuell's (R-Greenville) district. Deuell - along with Sen. Bob Duncan (R-Lubbock) - said many wealthy individuals who live and work in the cities are buying up ranch land. While some of these may be legitimate part-time farmers, others are essentially using the land for recreational purposes.

"Some retailers have told me that the ag exemption is getting abused a lot by people who are part-time, or they run some cattle on their land and they get the ag exemption for their property tax and they're buying a lot of things that their operation just isn't that big," Deuell said. While Deuell said he wanted to be fair to part-time farmers, he wanted to make sure the system wasn't being abused.

The state, which regularly audits the retailer, rarely does so to the buyer. If exemption forms are not in order, penalties could be levied on the retailer. David Sommerville, the supervisor of the comptroller's sales tax group, said retailers accept the sales tax exemption forms in good faith from the buyers.

Duncan said he wanted to take a better look at the issue and perhaps come up with a way to certify "bona fide ag production versus casual ag production."

Internet sales

Internet sales across state lines are not taxed. States and Congress passed laws several years ago to prevent these. One reason was to promote the new medium. Another was that making a tax work was too difficult. Sen. Kim Brimer (R-Arlington) said that neither of those reasons holds water now. The internet, he said, is established.

Adding in catalog sales, Texas loses $400 million a year in tax revenue from this source. Because interstate commerce is a federal issue, however, Texas can't solve the problem on its own. What it can do is advocate for federal law.

That's precisely what the state is doing through the Streamlined Tax Project, a joint project of several states to come up with a system of standardized sales tax rules.

The problem for Texas, unlike other states, is that its sales tax charges the tax based on the origin of the goods, rather than the destination. Were Texas to reverse the rules, it would make participation in the Streamlined Tax Project much more simple. However, because local governments rely so heavily on sales tax, such a change could be crippling to cities that export more goods than they import, such as Round Rock, the home of Dell Computer.

An alternative being proposed to the project organizers is to keep intrastate taxes (within Texas) on a origin-based tax and base interstate taxes on destination. Essentially, such a project would levy a tax on Texas purchasers of goods which go to Texas.

The project, however, remains far from ready to produce federal legislation right now.

Another issue, which Sen. Juan "Chuy" Hinojosa (D-McAllen) wants to address, is cross-border purchases. The U.S. Constitution (Article 1, Sec. 10) prohibits taxation of export goods.

Hinojosa, however, is concerned that there is too much opportunity for fraud and abuse, with the loss of sales taxes hurting his constituents. Mexican citizens can buy U.S. goods (and pay taxes), but can then file paperwork to receive a refund on those taxes. Hinojosa said the process for verifying that those goods were taken abroad was too lax.

He expressed interest in a California law requiring all items be shipped from the retailer across the Border in order to qualify for the exemption.


Another issue legislators will look at soon is exclusions – professional services not subject to the sales tax. When asked what other states do in this area, Reissig said almost no state taxes such services.

However, Ogden pointed out, those states, unlike Texas, often have an income tax.

The biggest area of exclusions is in the area of health care, where the tax, if levied, could generate $1.35 billion. Legal services, however, would only generate $364.3 million.

Sales Tax exclusions:

(Not a complete list)

Physician services: $727 million

Dental services: $259 million

Other health care: $365 million

All health care: $1.35 billion

Construction labor: $535 million

Legal services: $364 million

Architectural/engineering: $310 million

Personal services: $286 million

Freight Hauling: $224 million

Real estate: $192 million

Accounting services: $174 million

Financial Services: $156 million

Management/P.R. $139 million

Computer programming: $133 million

Total exclusions: $4.62 billion.

A full list of tax exemptions and exclusions can be found at the comptroller's website. Link here.

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by Trey Garrison    Mon, Mar 20, 2006, 09:35 AM

Okay I'm confused. This story (registration required) in the daily about the Neighborhood Stabilization Overlay – "a zoning tool aimed at helping neighborhoods impose their own restrictions" – seems to complain that it's an involved, difficult process to impose restrictions on property owners and homebuilders.

Why should it be easy to tell someone else, with force of law, what they can and can't build on their own property?

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