With the passing of Labor Day, the election cycle is now in full swing. Although cable TV commercials have been running for those well-funded enough to afford them, many campaigns are just now going up on commercial TV with their full ad buys, hoping their budgets allow them to stay up and on for the duration of the campaign. The negative ads showing up in close races, while those with comfortable margins run positive bio and “vision” ads. The overwhelming use of negative political ads in contested races is a long-running political tradition. It is much easier to convince a voter to be against someone than to be in favor of someone. It is possible that all of us have been in the position of voting for the “lesser of two evils” especially when “none of the above” is not usually an option. Much of the estimated $170 million dollars that will end up being spent by the two candidates in the Governor’s race will be spent between now and November 8. Early voting in Texas begins on October 24 and continues for 12 days. It will be here before we know it. If you are not registered to vote in the upcoming election, you still have time.
House Interim Hearings
The Senate has concluded most of its interim hearing schedule and has none scheduled at this time. If there are any issues still to be discussed these Senate hearings will probably not resume till after the November election. The House is still conducting hearings, and my understanding will continue well into October. Of interest to many businesses was the recent hearing in the House Ways and Means committee. Several charges on the agenda dealt specifically with changes made during last session that attempted to reform the property tax system and the property tax appraisal system. The hearing was lengthy and at times complex. The property tax system is arcane and not readily or easily understood for many payers, especially homeowners.
A long list of invited witnesses representing a host of professional and mostly business interests took the witness dais and engaged in a detailed and esoteric recitation of facts and figures that often left the listeners, both the knowledgeable and the uninformed with the feeling of not getting quite enough to be completely satisfied. The new system, the timing of the postcards, complexity of the worksheets developed by the Comptroller’s office, and to some degree, a lack of uniformity between taxing districts, all still needs some tweaks to be a bit more user friendly.
Once the invited testimony concluded, the public was allowed to address the committee. This testimony ran the gamut of personal interests and grievances—from repeal all property taxes and replace with the expected state surplus (the speaker did not have an answer about what happens next cycle when that surplus does not exist), to the make up and forming of Appraisal Review Boards and the ability to contest appraisals, and everything in between. The changes from last session will continue to be reviewed by this House committee and the appropriate Senate committee as well. I feel certain that additional changes for the appraisal process and all things connected will be considered next session.
At the conclusion of this discussion the committee moved on to the next charge dealing with not renewing Ch. 313 of the tax code and should it be replaced with something else. Last session the business tax incentive known collectively as “Ch. 313” was allowed to expire. What is a Ch. 313 tax exemption, you ask? Well, I will tell you.
Ch. 313 refers to Chapter 313 of the Texas Tax code. In this case the law allowed for an appraised value limitation on business property in which the taxpayer agrees to build or install property and create jobs in exchange for:
A 10-year limitation on the taxable property value for school district maintenance and operations tax (M&O) purposes.
This business incentive was wildly popular in a variety of areas around the state for the past several years. The reason for the lapse was that it was also extremely unpopular with large swaths of elected officials and just everyday citizens. The reasons against its continuance are numerous and wide ranging, from morally unfair for the government to pick winners and losers to the belief that some school districts and businesses took advantage of and abused the incentive. All these abuses, perceived and otherwise, were legal, just not overly popular, hence the reasons it was allowed to lapse.
Many in the business/economic development sector feel that Texas will be at a distinct disadvantage without this type of tax incentive when compared to other states. The majority of the remainder of the hearing dealt with this discussion. As with all interim hearings there were no specific bills discussed, votes taken, or decisions reached. I am not going too far out on a limb to suggest that this issue will be engaged at length during the upcoming legislative session and a great deal of money will be spent to see some version of this tax break be reinstated.
The recent rains allowed some portions of the state to ease out of their current drought status, but that condition may be short lived. While the rain is always welcome, it does not address the root problem of water need throughout most of Texas. A potentially larger impediment to business relocation to Texas than lack of tax incentives is most assuredly lack of water. As this is being written this morning on the first day of fall, Austin is forecast to reach 101 degrees for a high today, no rain in sight.
—Kyle Frazier, TWGGA Legislative Advocate