THE BILLS

Governor’s tax commission issues school-funding recommendations

The Texas Tax Reform Commission is recommending the Legislature reduce local-school property taxes, enact a new business activity tax to replace the current franchise tax, increase the cigarette tax by $1, and transfer $1 billion from reserves. This would not affect state or local sales taxes. The Texas Association of REALTORS® supports the commission’s approach because it reduces property taxes and spreads the tax burden across many businesses in different industries—and does not further raise the barriers to homeownership in a state that currently ranks only 42nd out of 50.

The commission’s charge from Gov. Rick Perry was to propose new alternatives for creating a broad-based, fair, and stable source of revenue for Texas public schools. The Legislature is under a Texas Supreme Court-imposed deadline of June 1 to fix the state’s current school-funding system, which relies heavily on property taxes. Gov. Rick Perry recently announced a special legislative session convening April 17 to deal with school finance.

The Legislature will take up the commission’s recommendations during the spring 2006 special session. To learn more about the plan’s specifics, we invite you to review its highlights or download the Texas Tax Reform Commission’s report, Tax Fairness: Property Tax Relief for Texans.