Some Eying Sales Tax Increase to Plug Budget Hole

It's not hard to find strange bedfellows in the Texas Legislature when the bills start flying. Republicans and Democrats frequently cross the aisle to support legislation they think will help their constituents. The same could be true as lawmakers try to figure out how to balance the state budget during the upcoming legislative session. 

The expected 2011 budget cuts are often compared to the situation in 2003, when the state had to trim about $10 billion from the state budget. But Dick Lavine, who watches state revenues for the Center for Public Policy Priorities, says the better comparison is the late 1980s, when the cuts weren't as high but were proportionally closer to what's expected in 2011. Back then, lawmakers created the Rainy Day Fund to help offset future budget crunches. They also imposed what some today say may again be necessary to plug an unprecedented $20 billion-plus budget hole: a temporary sales tax increase.

Lavine and the CPPP, a progressive think tank, are unlikely supporters of such an increase: Sales tax is considered regressive because it disproportionally affects families with low incomes. But, as Lavine said, "right now we are facing an emergency situation and we will have to look at what from our point of view in not necessarily the best choice but a choice that is better than cutting the budget."

Audio: Ben Philpott's story for KUT News

Though state Republicans have repeatedly invited Texans to read their lips — that no new taxes will be used to balance the state budget — at least a couple are likely to stick out their necks and propose some modest increase, like elimination of certain sales tax exemptions. But Michael Quinn Sullivan, president of Empower Texans, a conservative group that promotes low taxes, qualifies that assertion.

"I think that any Republican you see pushing tax increases is probably a Republican who's signaling that they are not going to be seeking re-election," Sullivan said.

Sullivan says there's no such thing as a temporary tax increase — that temporary sales tax increase in the late 80s was renewed. And while there probably is a magic number that even Republicans wouldn't want to cross while cutting the budget, he says, "we're simply not there yet — and the hysteria that some want to raise for the excuse of bringing more dollars into state government is simply unfounded."

So just how hysterical should we be? Comptroller Susan Combs will release her revenue estimate, which tells lawmakers how much money they have to spend over the next two years, before the legislative session starts next Tuesday.

 

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