State Rep. Warren Chisum talks with Ben Bius, of the Home and Land Owners Association of Texas, who hosted a legislative forum Wednesday night in Amarillo. Photo by David Bowser of Pampa News

Chisum views school finance bill as a success
The Pampa News 8/2006
By DAVID BOWSER, Staff Writer

AMARILLO - Pampa's State Representative thinks the school finance bill passed in last spring's special session is a major success, but he also thinks it will be critical to revisit it when the Texas Legislature meets again during their regular session in January.

“I kind of liked House Bill 1,” State Rep. Warren Chisum, R-Pampa, told a group of about three dozen Wednesday night at an Amarillo meeting of the Texas Panhandle legislators. “It was the one that I introduced and we passed and it got us out of the dilemma that we called the special session for because it funded schools.”

He said the bill will also bring down property taxes by 17 cents in 2007 and will bring them down by 50 cents in 2008. Those cuts, however, apply only to school districts maintenance and operations budgets.

“There were still a lot of reforms as it came back from the Senate,” Chisum said. “It had a lot of reform in it for education.”

It contained a $2,000 teacher pay raise and a $275 allotment per high school student.

“That's new money for schools,” Chisum said. “We got new money for schools. We gave the teachers a pay raise that they well deserved. We did all of that out of the budget surplus.”

None of that money, he said, came from the new taxes raised in House Bills 1, 2 and 3. The Legislature used a budget surplus.

Going into the special session last spring, after several special sessions in 2005 failed to come to grips with school finance, the Texas Comptroller estimated that the state had a budget surplus of $8 million. It turned out to be more.

The Texas Legislature was under a court ordered deadline to reform school finance.

Part of that school finance reform established by a series of bills is a margin tax, which is one of Chisum's concerns.

The margin tax establishes a tax on gross receipts less certain costs. Businesses can figure their tax on gross receipts minus either cost of goods sold or cost of labor, depending upon the type of business they're in.

Chisum said that tax will need to be reviewed during the next Legislative session.

“That's going to be a critical issue for us,” Chisum said, “because if we don't do that, then we're not going to get to the additional compression rate to bringthe M and O tax down to a dollar.”

All the money raised by House Bills 1, 2 and 3, he said, will go to fund tax relief.

“We're very interested in making that work,” Chisum said.

That tax may need to be amended, he said.

“The Ways and Means Committee is going to have to look at House Bill 3, the margin tax,” Chisum said. “There are a lot of issues that need to be brought up and decided upon in order to be a fair tax. That will probably consume all of their time.”

State Rep. John Smithee, R-Amarillo, serves on the Ways and Means Committee.

“People are always asking what the big issue's going to be,” Smithee said, “and I always say the cost of goods sold. That's going to be a big issue.”

He said there are dozens of bills being drafted by the private sector to try to redefine the cost of goods sold.

“One of my concerns about this tax bill has always been that we're going to get to something that's as long and as complicated as the IRS code.”

Smithee said he used to maintain that he didn't want to pass a tax bill that couldn't be written on the back of an envelope.

“That's probably wishful thinking,” Smithee said. “It's very complex.”

Another concern Smithee has is that a lot of the definitions in the Texas tax bill are different than those of the Internal Revenue Service.

“My concern is that a lot of businesses, particularly small businesses, will have to do two sets of computations,” Smithee said. “One for state and one for federal income tax.”

State Rep. David Swinford, R-Dumas, said he thinks the major issue when the Texas Legislature meets for their biennial session next year will be the budget like it is every two years.

The Texas Comptroller by law estimates the amount of money available to the Legislature. Swinford said the problem will be, like it always is, to stay within the Comptroller's projected revenues.