Texas Senate May Curb Tax Breaks, Sell Property to Aid Schools

Texas’s Senate may try to end some business-tax breaks, sell government property and accelerate confiscation of unclaimed assets to raise $5.5 billion and avoid slashing education spending in the second-most populous state.

Dozens of revenue-raising ideas are listed in a “fiscal matters decision document” produced by a panel led by Senator Robert Duncan, a Lubbock Republican. In an interview yesterday, Duncan described the document as a “starting point” for discussion and said some of the proposals would be dropped, such as liquidating the state’s $590 million tobacco trust fund.

Duncan’s panel is trying to provide the Senate with a menu of options to avoid making deep cuts in education, he said yesterday in Austin. The House of Representatives passed an $83.9 billion two-year general-fund budget on April 3 that reduces spending for public schools and state colleges 6.5 percent, or $3.2 billion, from the current budget.

“We aren’t Washington, D.C., we haven’t been overspending in Texas,” Duncan said. “We can’t stay attractive as a state unless we have an appropriate revenue system.”

Some proposals being considered, such as charging $100 to buyers of new gas-guzzling vehicles to raise $115.3 million, and assessing satellite-television providers a fee to bring in $102.4 million, amount to tax increases that break Republicans’ pledge against imposing new levies, said Michael Quinn Sullivan, president of Empower Texans. His group, which advocates limited government, posted the discussion list on its website yesterday.

Opposing New Taxes

Lieutenant Governor David Dewhurst, the Senate’s president, “has been very consistent about opposing new taxes and hopefully the Senate will follow,” Sullivan said.

In addition to the economic slump that bit into sales-tax collections, Texas’s revenue hasn’t gained as much as forecast from a levy established in 2006 as many businesses devised ways to avoid paying it, Duncan said. The change was aimed at offsetting reductions in local property assessments.

Texas’s taxation should become more equitable, Duncan said, while declining to comment on specific proposals. “We need to address why some businesses are avoiding taxes, while others are paying them,” he said.

Other ideas up for discussion include the release of 3,000 nonviolent prisoners who are eligible for parole and immediate deportation, saving the state $111 million. Shortening the amount of time the state must wait to take abandoned bank accounts and other assets would produce $78 million.

Speeding up the collection of quarterly franchise taxes, which Duncan likened to a “cash management” change, would reap $880 million. Suspending a tax cut on natural-gas companies for two years would produce $426 million.

To contact the reporter on this story: David Mildenberg in Austin, Texas, at dmildenberg@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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