House approves business tax cut rather than funding education

Date Posted: 5/08/2013 | Author: Jennifer Mitchell, CAE
Last night, the Texas House passed House Bill (HB) 500, which provides over $666 million in tax cuts for businesses. The business franchise tax, created for the purpose of funding public education, has never produced the amount of revenue it promised. In fact, the franchise tax has caused a structural deficit in the state budget, which grows with every year that the tax underperforms, effectively underfunding public education at the state level and forcing higher local property taxes to make up the difference. Despite the fact that the current proposed budget is not even close to restoring the education cut from last session, the Texas House chose to pass a tax cut for business special interests. The bill, offered by House Ways and Means Committee Chairman Rep. Harvey Hilderbran (R-Kerrville) makes numerous adjustments to the business franchise tax that will take more than $666 million from the state budget. The bill now heads to the Senate and, if passed, will go to a conference committee to determine which businesses will receive these tax cuts. HB 500 was not included in the budget that passed in both houses, so decisions made on this bill will drive all other budget decisions for the state budget conference committee. That means money will have to be taken from other parts of the budget—including public education—to pay for the bill, if it becomes law.
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