El Paso State Rep Blames Margins Tax For Texas Budget Woes

The state of Texas is facing a $27 billion deficit, creating headaches for public schools and other state agencies facing budget cuts. But El Paso State Rep. Joe Pickett said the economy is not to blame.

Gov. Rick Perry and house leaders have agreed to dip in to the state’s Rainy Day fund, but Pickett said even if the entire Rainy Day fund were to be used, it would only make up for a third of what the state needs.

Rather, Pickett points out to legislation made two sessions ago as the cause, and the potential fix for the state’s budget woes.

“We changed the franchise tax into a different form called a margins tax, and that business tax was supposed to capture all the people who weren’t paying, and its not working. It’s only collecting half of the money that was anticipated,” said Pickett.

Last November, the Austin American Statesman reported that a state task force issued a report showing only $3.9 billion in margins tax revenue was collected in the last fiscal year, compared to $6.4 billion projected — creating a $2.5 billion gap.

Pickett said the change was originally intended to alleviate property taxes in funding public education, and recommends reforming the margins tax to help balance the budget.