Lawmakers Mulling Tax Bill

AUSTIN (AP) – Gov. Rick Perry continued Tuesday to promote his plan for state tax reform, trumpeting the support of Hispanic business leaders and courting lawmakers who are back in Austin to overhaul the unconstitutional system.

A day after House Speaker Tom Craddick said he would encourage his chamber to vote for the Perry tax plan, Republican Lt. Gov. David Dewhurst stopped short of endorsing the bill. “I’ve been sensing since yesterday more support” for the Perry plan, said Dewhurst, who presides over the Senate.

Perry hopes that the plan he’s supporting will satisfy the Texas Supreme Court, which last year ruled the state’s school funding system unconstitutional and ordered it fixed before June 1. If no solution is in place by that date, funds to public schools will be frozen, effectively shutting down schools.

In the House, where tax bills must start, Craddick said he was still talking with representatives to gauge their support for the Perry plan, which has been broken up into five pieces of legislation and is awaiting a committee hearing. “We’ve got a real mix,” Craddick said Tuesday. “A lot of people are undecided. We’re starting to meet with them in small groups today.”

The first bills will be considered in the House tax-writing committee on Wednesday. In its first year, Perry’s plan would reduce school property taxes by a third and revamp the state’s loophole-ridden business tax.

A majority of Texas businesses – most of which would be hit with a bigger tax burden under the plan – have endorsed the proposed business tax structure.

The latest business group to sign on, the Texas Association of Mexican-American Chambers of Commerce, called the plan “the best proposal to provide a fair and equitable distribution of the tax burden while providing property tax relief for the Texas employers and employees.”

Also Tuesday, Perry said he would like to see some of the state’s $8.2 billion budget surplus used for property tax relief beyond the cuts he’s already proposed. Some Democrats have criticized the plan because it doesn’t include money for school improvement measures.

But both chambers have pending legislation that would give teachers and other school personnel a pay raise and institute a teacher incentive pay program, among other initiatives. Perry has said those school reform measures wouldn’t be allowed until the Legislature has reached an agreement that would get it out of trouble with the court.

“With over $8 billion available before the Perry tax plan is even considered, any school finance plan that leaves our children’s schools and their teachers out of the equation just doesn’t add up,” said Donna New Haschke, president of the Texas State Teachers Association.

In a Capitol hearing room Tuesday, a litigator for the state cast doubt on whether the plan as written would satisfy the court ruling. Because the court mandated that school districts must have discretion to set their own tax rates, the proposed limits on how much districts can raise their rates every year could be problematic.

The question the court will ask is “who’s the decision-maker?” said Ted Cruz, Texas solicitor general, who represented the state in the school funding trial. “If the decision maker is the people in this building … that is a problem.”

By APRIL CASTRO Associated Press Writer

(Copyright 2006 by The Associated Press. All Rights Reserved.)

AP-NY-04-18-06 1822EDT