Gov. Perry raises prospect of tax rebates for Texas residents
Star-Telegram Staff Writer
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If Perry can give tax rebates, why not use the surplus on roads?
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PoliTex blog: On politics from Fort Worth to D.C.
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AUSTIN -- With top state officials forecasting a budget surplus as high as $15 billion next year, Gov. Rick Perry will likely call for a round of tax cuts that could include cash rebates to Texas residents, Perry's spokesman said Wednesday.
"The governor believes that with a surplus of this size, we need to find a way to give tax relief to hardworking Texans," Robert Black said. "The question is whether it should be in the form of additional property tax reduction, lowering the business tax, cutting the sales tax or actual rebates like the federal government is doing."
The remark came one day after state Comptroller Susan Combs told reporters that despite the slowdown in the national economy, money continues to pour into the state treasury from a wealth of sources: oil and gas taxes, sales taxes, the $1-per-pack tax increase on cigarettes and the business franchise tax enacted two years ago as part of a new school finance package.
The state is on pace to realize a surplus of about $10.7 billion, Combs said.
Earlier this week, Republican House Speaker Tom Craddick posted an essay in the conservative online newsletter The Texas Insider suggesting that the figure could be $3.3 billion more than Combs' early estimate.
He attributed the robust forecast to the Legislature's decision in 2003 to slash state spending and promote economic development when the state was billions in the red.
"Five years ago we faced a $10 billion dollar deficit," Craddick wrote. "Rather than raise taxes to bridge the gap, we found ways to be more efficient and operate government with the revenue available."
Rep. Marc Veasey, a Fort Worth Democrat, cautioned against a rush to cut taxes, pointing out that Perry and lawmakers enacted a one-third reduction in property taxes as part of the 2006 school finance overhaul.
He also said many state social service agencies have yet to recover from the 2003 spending reductions.
"I'm all for giving the taxpayers a break when we can afford to, but this state still has an awful lot of unmet needs," Veasey said. "We need to make sure that the children who qualify for CHIP [the Children's Health Insurance Program] are being enrolled, make sure that the schools are being funded and make sure our other needs are being met, too.
"Then, if we still have money left over, we can talk about tax cuts."
Black said that Perry is aware of the ever-expanding need for state services, though he said some are mandated, but not fully paid for, by the federal government.
He cited the Medicaid program that ensures access to healthcare for indigent Texans as one example.
"The governor understands that we can't be Pollyanna about the surplus because a growing state like Texas continues to have needs that must be addressed," Black said. "His point is that just because you have a big surplus doesn't mean you have to spend it all."
Black said it would be premature to specify which taxes would be reduced because lawmakers do not return to Austin until January.
The idea of a direct rebate to taxpayers has some appeal, he said, but it would require a voter-approved constitutional amendment after the legislative session ends.
Shortfall to surplus
The state's financial outlook has been on the rebound since lawmakers faced a crippling budget shortfall that forced deep spending cuts in the two-year budget cycle in 2003. Here's a look:
2003 $9.9 billion shortfall
2005 $400 million surplus
2007 $14 billion surplus
2009 $10. 7 billion surplus (This figure will likely be revised when the official revenue estimate is calculated in January.)
Source: Texas comptroller's office
jmoritz@star-telegram.com
