Texas gov's call for tax relief short on details

AUSTIN, Texas (AP) -- Gov. Rick Perry says the time has come for Texas to look at tax relief again. But he's not yet saying for whom or how.

Emboldened by a resurgent Texas economy, Perry on Wednesday repeated his call for the Republican-controlled Legislature to tackle tax relief this session but didn't offer any further details than when he rolled out the goal a day earlier while ringing in a new session.

The last one in 2011 began with a $27 billion budget shortfall, which left lawmakers scrambling to plug budget holes and makes talk of easing taxes now a total turnaround.

Any framework for tax relief likely won't emerge for several weeks while the most inexperienced Texas Legislature in more than four decades — more than a quarter of the 150-member House are freshmen — settles into the Capitol. Lt. Gov. David Dewhurst said homestead exemptions may get a second look, while other targets could include extending sales tax holidays and changes to the state's franchise tax on businesses.

Perry, who remains mum on his future following this session after a failed run for president, seized on tax relief to again hammer at Washington following the fiscal cliff deal in Congress that raised taxes on the wealthiest Americans.

"What a stark contrast it can be over the next 130-plus days that Texas is sending the absolutely opposite message," Perry said. "That we're going to lower the cost, lower the burden of doing business in the state of Texas, or living in the state of Texas. That's part of the conversation that we want to have."

Welcoming that conversation are Dewhurst, who opposed tax-relief proposals in 2007 but says a rosier economic forecast now makes the timing better, and House Speaker Joe Straus.

After being re-elected Tuesday for a third term as speaker, however, Straus made clear to reporters that his top priorities are not taxes but education, infrastructure and water.

"There's going to be a call for some tax reform, maybe some tax relief somewhere. There always is," Straus said. "But there's more of a call this time, and more of an agenda that I've been trying to push, to make sure Texas can accommodate the enormous and profound growth that we've seen in recent years that will go on unabated."

Even without a concrete plan on the table, Democrats are already blistering at calls to prioritize taxes.

They had greeted this week's strong state revenue forecast for 2014-15 with hopes of reversing deep across-the-board cuts to the current budget. That includes $5.4 billion slashed from public schools, yet Perry made no promises Wednesday that any of that funding would be restored.

Lawmakers potentially have more than $101 billion in available spending this time, though the GOP-controlled Legislature is unlikely to spend all of it. Nearly $9 billion of that is a so-called surplus from the current budget cycle, and more than half of that is expected to settle a hefty Medicaid tab carried over from two years ago. The balance in the state Rainy Day Fund is also expected to balloon to nearly $12 million.

The healthy projections have amplified calls to return the money to schools, infrastructure and confront a growing water crisis.

"I don't know how you add a tax cut," said Democrat Rep. Raphael Anchia of Dallas. "That kind of activity seems to be counter to investing in the future of the state, which is desperately needed."

Among the few proposals filed so are by Republican Rep. Harvey Hilderban, chairman of the tax-writing Ways and Means Committee, that would permanently install a tax exemption for small businesses that earn less than $1 million a year. The franchise tax is the state's second-biggest source of revenue behind the sales tax but has been maligned by the business community as unfair.

The last major tax relief happened in 2006 when property taxes were cut statewide by up to a third, but expected revenues to replace that money have underperformed.

Dale Craymer, president of the Texas Taxpayers and Research Association, said the franchise tax is the most likely first target for lawmakers. But he said plenty other proposals could also be on the table as lawmakers are buoyed by a healthy economic outlook.

"The magnitude of the revenue estimate is beginning to invite a renewed discussion," Craymer said.

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