Editor’s Note: Tax reform, no catastrophe relief

The Texas Legislature concluded its recent special session by passing school finance and property tax reform—finally. After two regular sessions and four special sessions, Texas lawmakers were able to set aside their differences and do right by the state in regards to property tax relief and changing, hopefully for the better, the way Texas funds its public schools. Of course, it took a judge’s order and a pending deadline to make them do it.

One wonders what it will take for the legislature to take up the issue of raising money to adequately fund restoration and rebuilding in the event a major catastrophe, like last year’s Hurricanes Katrina and Rita, strikes the state’s heavily populated coastal areas. The Texas Windstorm Insurance Association and several insurance groups, including the Independent Insurance Agents of Texas and Texas Insurance Professionals – PIA of Texas, strongly urged Gov. Rick Perry and the lawmakers to consider measures during the special session that would allow for the issuance of pre-event and post-event revenue bonds to raise money to boost the state’s catastrophe fund for windstorm losses along the Gulf Coast. Currently, if losses of more than $1.3 billion should occur along the coast—which could easily happen if a major hurricane hits the Galveston or Corpus Christi areas—the state’s general revenue fund would have to be tapped.

The legislators didn’t tackle the issue during the special session, so it looks like it will have to be taken up in the next regular legislative session in Spring 2007. Meanwhile, a joint House-Senate committee is expected to conduct an interim study of TWIA’s funding and other related issues before the 2007 session. According to TWIA Executive Director Jim Oliver, the idea is to be able to raise enough money through the bond issues “to gradually pull the general revenue fund off the hook.” TWIA would also like the legislature to change the way the association staffs its Board of Directors in order to receive tax-exempt status from the Internal Revenue Service.

Meanwhile, at press time, five tax/school reform bills were on Gov. Perry’s desk, awaiting his signature. According to the announcement on the Texas Senate’s Web site, the “five bill tax package does several things. It would reduce property taxes by one-third by 2008, and would create a broad-based business tax on gross receipts for companies that earn over $300,000. It would raise the tax on a pack of cigarettes by one dollar, and would require used car purchasers to pay sales tax on at least 80 percent of the blue book value of the car.” It also provides more money for education, including pay raises for teachers and support staff.

The tax initiatives were supported by various business and insurance agent groups, including the Texas Association of Business, IIAT and PIA of Texas.

Topics Catastrophe Texas