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Legislature wraps session with focus on taxes, highways

 - TAB scores major wins on key efforts

State lawmakers on Monday wrapped up their regular 140-day biennial session, concluding deliberations on the state’s two-year spending plan, a package of tax cuts and a significant boost in funds for state roads and highways. They left Austin without having to worry about returning for a special session as many Capitol observers predicted might be necessary when lawmakers convened in January.

Texas broadcasters scored a number of wins as TAB secured reinstatement of a sales tax exemption for radio stations’ digital transmission equipment, clarification on how large TV groups account for revenues generated out of state for franchise tax purposes, legislative reversal of a state supreme court ruling that jeopardized reporters’ ability to report third party allegations, statutory requirement that complete motor vehicle accident reports be available to local broadcast and print journalists, and application of the Texas Public Information Act to private university police departments.

Some of the measures, including the third party allegation bill, already have been signed into law by Governor Greg Abbott, while others await his signature.  Abbott has until Sunday, June 21, to sign, veto or allow bills to become law without his signature.

TAB’s efforts, alliances with other Open Government and industry groups, and network of grassroots advocates at radio and television stations across the state were key to the extraordinary support from lawmakers of nearly all political stripes, not just for the bills TAB was advancing but also for those that threatened harm to newsrooms.

Tax relief for business, homeowners

The tax cut package nearly ran off the rails after the Senate was perceived to have stiffed big business in favor of small business and homeowners, but legislative leaders had a strong incentive to resolve their differences quickly. With revenue projections for the next two year budget cycle weakening, lawmakers would have faced a lower revenue estimate that would be required if a special session had been needed to adopt the budget. That, in turn, would have forced a reworking of the state’s two-year spending plan.

As finally passed, businesses will get a 25 percent reduction in franchise tax rates, while homeowners will see their school property tax homestead exemption increase from $15,000 to $25,000, subject to voter approval in November.

The franchise tax cuts will take effect with returns due in May of 2016 and beyond. The homestead exemption increase will show up in this October’s tax bills and save approximately $130 per home. In the unlikely event the November ballot initiative fails, homeowners will be subsequently billed for the difference. The jump in the exemption, however, will not reduce homeowners’ total property taxes, just slow the rate of increase.

The agreement nixed the Senate’s preference for a lower homestead exemption and an increase in the franchise tax revenue exclusion from $1 million to $4 million, as well as the House’s proposal to reduce the state sales tax for the first time in its history.

November ballot and beyond

In addition to the homestead exemption increase, voters in November will be asked to vote on a plan to dedicate billions of dollars in sales tax revenue to highway construction, as well as several other measures.  TAB will provide a complete list of these ballot propositions next week.

While lawmakers increased school funding by $1.5 billion in addition to what was needed to cover enrollment growth resulting from the state’s booming population, they did nothing to revamp the much-maligned school finance system which has been found unconstitutional and is awaiting a final ruling. Lawmakers left $3 billion in general revenue unspent which will provide them some flexibility if the court upholds the ruling.

If the Texas Supreme Court rules against the state, the question of whether a special session on school finance will be needed depends on the deadline the court imposes on the legislature to take action.  Legal briefs are expected to be due mid-August, with oral arguments possibly following in October and November. If correct, a decision would be expected sometime between March and May 2016.

Questions? Contact TAB's Oscar Rodriguez or call (512) 322-9944.

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