December 6, 2011
I know my Senate district. I know who and what I represent.
I’m a walking, talking Wikipedia page about how much our hometown University does to change the world. I know how to proudly hold my horns high. I know all the words to The Eyes of Texas.
Sic ’em, Bears.
Last week, I keynoted the Greater Austin Hispanic Chamber of Commerce’s Tri-county Small Business Summit in San Marcos.
The meeting was a few days after the Texas Supreme Court ruled that the state’s business tax, also known as the margins tax, is constitutional. That ruling could have a big impact on businesses, and small businesses in particular. Because now that the margins tax has been determined to not be an unconstitutional income tax, the legislature will have a foundation for dealing with a growing financial problem.
Of course, the small business issues I talked about last week affect more than just small businesses. All told, these enterprises account for nearly 46 percent of the state’s private-sector jobs and more than 95 percent of the state’s employers, according to the National Federation of Independent Business.
And the margins tax has a big impact too, whether or not you’re a business that pays it. Not only is it a major source of revenue for our state, but it was created five years ago as part of an effort to financially shore up our schools and cut property taxes across Texas.
Partly as a result of this failure, the state confronted a roughly $27 billion shortfall this year. And we could face more 11-figure budget issues when the legislature reconvenes in 2013.
Many businesses loathe the margins tax, feeling it has a disproportionate impact on them. Some of these issues, such as the way the tax deals with contract labor, have been brought before the state’s Business Tax Advisory Committee in recent years.
(One of my great frustrations at the Capitol is that the advisory committee, which I’ve served on but I didn’t set the agenda for, has seemed to go out of its way to avoid living up to its name. It ran from “advising” in an area where the state so badly needs advice.)
But the state’s also facing another school finance crisis – much like it did in 2006, when the margins tax was adopted. School districts are once again suing the state over what they rightly argue is an inadequate and unfair education system.
In other words, not only is the margins tax broken, but the school finance problem it was meant to solve has become re-broken. In fact, some would argue that it’s always been broken, and the problems of the busted system have simply reached another crisis point.
Last session, the Chair of the Senate Finance Committee at least gave a speech saying we needed to deal with failure of the margins tax, though nothing came of it. So will those in control of the Capitol now make a serious effort to correct this problem that’s presenting such a challenge to Texas and its future?
Or will they try to ignore the problem a little longer?
Those are tough questions about a very hard challenge. But I’m hopeful that those in control of the state will make a real effort to answer them, even if it means jumping on all of these issues in the 13 months we still have before the session starts.
Our school children, our businesses, and our people deserve it.