of the senators to agree to bring a bill to the floor for debate. This gives Senate Republicans complete control of the Senate agenda, provided they can agree among themselves on what bills to debate. Straus announced the House committees a couple of weeks later. Unlike the Senate, committee chairmanships were doled out proportionally to the number of Republicans and Democrats in the House, giving chairmanships to 13 Democrats and 27 Republicans. Otto was named chairman of the important and powerful Appropriations Committee, the committee that writes the state budget. Rep. Angie Chen Button was selected to chair the Economic and Small Business Development Committee. Button will also continue to serve on the Ways & Means Committee, the tax writing committee of the House, as well as the Rules and Resolutions Committee. Another CPA and TSCPA member, Rep. Phil Stephenson, will serve on Investments & Financial Services and Pensions. Tom Frullo, who has an inactive CPA license in another state, was selected to chair the House Insurance Committee and will also serve on the Culture, Recreation and Tourism Committee. Rep. Scott Sanford, another House CPA, will serve on Juvenile Justice & Family Issues and Land & Resource Management. The bill filing deadline is March 13. By the time you read this article, legislative committee hearings will be in full swing. After March 13, bills can be scheduled for a vote. Expect to see bills erupt from the Senate after that date, while the House may be more deliberate in the process. It’s a lot easier to operate with 31 members than 150.
TSCPA Legislative Proposal Reducing redundant filings for limited partnerships and professional associations is the primary legislative initiative for TSCPA this session. Both the secretary of state and the comptroller’s office are supportive of this initiative. It’s a little complicated, but with the help of these state officials and our legislative sponsors, we are optimistic a good bill can be drafted and passed. Otto and Perry submitted bill requests for drafting, but we didn’t yet have bill numbers at press time. Tax Cuts According to Otto, who is Appropriations Committee chair, Texas has enough revenue available to craft a budget and provide some tax relief. Legislators are almost giddy over the possibility of reducing taxes for both individuals and businesses. The Senate made a statement when they announced that SB 1 would be a tax-cut bill of approximately $4 billion with it split roughly $3 billion to property tax relief and $1 billion in franchise tax relief. SB 1 is normally the designated budget bill. The budget bill is playing second fiddle as SB 2. While SB 1 has the noted designation, so far the bill has no content. However, Sen. Paul Bettencourt (R-Houston) has filed SB 515, which doubles the school property tax homestead exemption from $15,000 to $30,000. This bill would use up $2 billion of the Bob Owen, CPA
proposed $3 billion in property tax relief. The other $1 billion in relief will supposedly be used to reduce business property taxes, but no bills had been filed at press time. In the House, Rep. Armando Martinez (D-Weslaco) filed HB 52 increasing the homestead exemption from $15,000 to $45,000. That bill would cost about $3 billion in revenue. About 40 franchise tax bills have been filed, including 11 to repeal or phase out the tax. The cost of eliminating the franchise tax is $10 billion for the biennium, which is probably a little more than the budget will allow, even with the surpluses available. All of the other bills reduce the franchise tax in some manner through rate reductions, new tax credits, special provisions for small business or other industry-specific relief. The most talked about franchise tax relief is to continue the 5 percent rate reduction that expires this year or perhaps double that reduction and make it permanent. That has about a $.5 to $1 billion biennial cost depending on the amount of the rate reduction. Another proposal would increase the small business exemption from $1 million to $5 million. According to the bill author, that would reduce the number of businesses paying the franchise tax from 125,000 to 55,000. This bill would fit nicely into the $1 billion number in SB 1. A bill has also been filed to eliminate the franchise tax for entities that show a loss on their federal income tax return.
The Hot Buttons Revisited In the last Capitol Interest article, we mentioned several hot button issues for the session. We were right on target with regard to tax cuts, guns, border security and school vouchers. In fact, the first bills to be approved by a committee were the bills authorizing concealed handguns on university campuses and permitting handgun license holders to openly carry holstered weapons. They may be the first bills passed by the Senate. Border security is also front and center in the budget discussions with differences in approach surfacing between the House and Senate. The Senate also has a school voucher bill that would entitle a student to a voucher equal to 60 percent of the statewide average per-student cost, which could be used to enroll in a private school. While there has also been an active debate going on about repealing in-state tuition for undocumented students, with the lieutenant governor on one side and the speaker of the House on the other, there has only been one bill filed on the issue. Despite that, pundits still believe that in-state tuition for undocumented students will be repealed. Although bills have been filed on abortion, gay marriage, home schooling and charter schools, there has been little written or said about those bills. We will see more as the bills move through the committee process. You can keep up with legislative activity on our blog (http://tscpaatthecapitol.com) or by following us on Twitter @TSCPACapitol. continued on next page
is TSCPA’s managing director of regulation and legislation. Contact him at bowen@tscpa.net.
Today’sCPA March/April 2015
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