Doubling Down on Sales Tax Swap, Abbott Puts Texas Republicans in a Box

Months ago when the Big Three first unveiled this session’s signature property tax “relief” bill, and remember it was introduced as the “Property Tax Reform and Relief Act of 2019,” they were flanked at a news conference by Senate Property Tax Committee Chairman Paul Bettencourt and Ways and Means Chair Dustin Burrows.

Without those chairmen present, Gov. Greg Abbott, Lt. Gov. Dan Patrick, and Speaker Dennis Bonnen held another news conference this past Friday to explain that while the rollback elections contained in Senate Bill 2 would be “reform,” there is no “relief” in the bill which is why they are now exploring other ideas.

Without naming former Speaker Joe Straus, Speaker Bonnen mentioned that for the first time in years the state’s legislative leaders have had breakfast together in the month of May. That drew some laughs.

Some conservatives were not amused, though, at what some of them were quick to call a possible “read my lips” moment from Abbott when he said assuredly that when this Legislature’s work is done property tax bills next year will be lower than the bills Texans receive this year.

Lt. Gov. Patrick and Speaker Bonnen were careful in how they answered questions about whether the proposed constitutional amendment to execute a tax swap, raising sales taxes in exchange for a property tax buydown, could garner two-thirds support in the House and Senate. Patrick did say the challenge would be more difficult in the House. Bonnen said he felt “positive.”

It’s our understanding that House leadership is setting bills now for some of the members on the final calendars of the session in exchange for their promise to vote for the swap. You know, pretty typical horse trading.

Patrick predicted more than 70 percent of Texans would vote for the tax swap if it is ever on the ballot. But it may be difficult for him to get support from even half the Texas Senate.

The Senate’s presiding officer earlier this year had to threaten to end decades of tradition to be able to round up the 19 Republican senators necessary to bring SB 2 to the floor, only to lose one of them on the final vote. That was before he denied Senate Democrats a seat at the table in budget negotiations. All this raises serious doubts about a path to 21 votes for a constitutional amendment.

After Friday’s news conference, the Legislative Budget Board released its estimates of the tax swap’s potential impact to taxpayers.

The numbers were in line with what economist Dr. Stuart Greenfield previously wrote in Quorum Report. Bottom line, the swap would not benefit Texans earning less than about $150,000 per year. Not only that, but some numbers Republicans were sharing with each other Friday afternoon showed that unless a property owner is living in a home valued at $700,000 or more, the tax swap would not even start to benefit them.

“That’s certainly not what my district looks like,” grumbled one Republican House member who very nearly lost the election to a Democrat in 2018. While Democrats have been rubbing their hands together at the prospect of a Republican-driven sales tax increase, already promoting messages like “the GOP wants to raise taxes on diapers,” the real anger so far has come from the right.

It has taken some time, but Friday’s performance seems to have completed Lt. Gov. Patrick’s transformation to a politician in Austin not trusted by conservative radio talk show hosts.

“I trust no one,” wrote Mark Davis, one of the leading conservative radio talk show hosts in DFW, reacting to the proposed tax swap. He very often has Patrick as a guest on his show. “They are totally going to screw us. No way property taxes go down as much as sales taxes go up,” Davis said. “The proud Texas tradition as a low tax oasis has become a mirage.”

Meantime, conservative stalwart JoAnn Fleming, leader of “Grassroots America, We the People in Tyler” and a significant activist once turned to by Patrick for his now defunct Grassroots Advisory Board, is blasting GOP members of the House for being too cozy with the speaker. Sounds familiar.

“It DOES NOT matter how much time you spent this session in the Speaker’s office sitting at the table behind closed doors,” Fleming wrote in an email to supporters this week. “Did you advance government at the expense of our liberty? Results matter. We’re still waiting.” Oh, and Chairman Tim Dunn’s Empower Texans is running a petition to “Tell your state legislators that you reject the Abbott sales tax increase!”

If two-thirds support can be found for this proposed constitutional amendment, that would trigger an election about revenue. How about that? Abbott would need to convince voters that state government needs more revenue in the same way he proposes mayors and county judges should be forced to do under SB2.

But here was perhaps the most important takeaway from the Big Three’s news conference: The leadership left the door open to executing the tax swap through statute, rather than a constitutional amendment. Patrick said that if two-thirds cannot be found, it’s going to be done anyway.

Such a move would carry at least two major consequences.

First, if sales taxes were raised through a change in statute with a simple majority, the revenue would not be constitutionally dedicated for the promised purpose of property tax relief. A future legislature could use the revenue for, well, anything. Second, raising taxes through statute would mean Abbott believes Texans should have the opportunity to vote on tax increases at the local level but a tax increase at the state level can be trusted to politicians.

That’s a tight box to be in, but Abbott and Patrick – not on the ballot in a presidential year – would not be in it.

Of the Big Three, only one has his seat at that breakfast table threatened by the results of the next election.

Copyright May 04, 2019, Harvey Kronberg, www.quorumreport.com, All rights are reserved.  Reprinted by permission. Check out Quorum Report daily for real time updates on what’s happening in this legislative session. 

 

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