January 6, 2005

Dewhurst Envisions Ambitious Agenda
for Session Without Net Tax Increase

By Mike Hailey
Capitol Inside Editor

Lieutenant Governor David Dewhurst's legislative agenda for the upcoming regular session includes the boldest school finance plan he's ever seen, billions of dollars in property tax savings, billions of new dollars for children's health care and protective services and higher pay for school teachers, state police and other public employees. Despite his own prediction of a potential revenue shortfall that could top $2 billion, Dewhurst believes the goals he's set forth are achievable without a net increase in state taxes.

The Republican Senate leader on Thursday gave the Capitol press corps a peek at the broad outline of a starting-point gameplan and wish list of priorities that he will take into the session that convenes Tuesday at the state Capitol. Dewhurst predicted the Legislature would be in better shape this time around than in 2003 when they were forced to confront a $9.9. billion budget deficit. He attributed the improved financial picture to an economy that's exceeded expectations and produced a surge in state revenues from sales taxes, severance taxes and other sources. But Dewhurst still suspects that the state will be short between $1 billion and $2 billion when Comptroller Carole Keeton Strayhorn issues her revenue forecast for the next two years sometime presumably between now and opening day early next week.

Dewhurst said that a statewide property tax is probably the most equitable option that the Legislature has for revamping the way public schools are funded. Senate Education Chairwoman Florence Shapiro said this week that she favors a statewide property tax as part of a school finance plan. Dewhurst indicated that legislators might consider a business tax with a lower rate and a base expanded to all businesses including those that have found ways to escape paying the state franchise tax. Dewhurst said the entire plan will depend on a fully-expanded base with no exceptions. "If we leave anybody out," Dewhurst said, "the whole plan will unravel."

Governor Rick Perry, who threatened to veto a business payroll tax proposal in the special session on school finance last spring, indicated this week that he might be willing to go along with a broad-based business tax similar to concepts that Dewhurst and House Speaker Tom Craddick have suggested as part of a final solution to an overhaul of the state's system of public school funding.

Dewhurst envisions a school finance plan that will boost the state's share of public education to more than 60 percent from below 40 percent where it now stands. Dewhurst indicated that the Senate might support restoring funds that were cut from the Children's Health Insurance Program and Medicaid along with new money for other health and human services programs such as children's protective services.

Perry unveiled a plan in San Antonio on Thursday that would earmark $329 million in state and federal funds for the beleaguered CPS program. Dewhurst has urged the governor to declare protective services an emergency issue that legislators could consider immediately after convening next week.