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Inside Intelligence: About That Surplus...

For this week’s nonscientific survey of governmental and political insiders, we asked about forecasts of a budget surplus in 2015 and what that might mean for taxes, spending and gambling.

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Ask our insiders in government and politics about what will happen if there is a budget surplus next January and nearly half will yell “tax cuts” back at you, while 28 percent expect no changes and 22 percent think lawmakers will increase spending.

They split on the question of what lawmakers will do when it comes to property taxes. About two in five expect new restrictions on appraisal increases and about the same number expect nothing at all. Only 1 percent said lawmakers will abolish or replace those taxes.

A surplus means there will be no new gambling allowed in the state of Texas, though we didn’t ask this time whether gambling would be a possibility if the state is hunting for money. It is not, and 98 percent said you can stick that gambling idea back in its suitcase. Finally, we asked what tax lawmakers are most likely to cut, if they cut taxes. Three out of four said business franchise taxes would top that list.

We collected comments along the way and have attached a full set of those. Here’s a sampling:

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With a state budget surplus ahead in 2015, what do you think is the most likely outcome?

• "It depends on the outcome of the pending school finance lawsuit, which could potentially cost the state several billion dollars."

• "The votes won't be there for a tax cut, regardless of what the T Party wants."

• "It is likely that some will be reserved for a special session on school finance."

• "Roads and education are due."

• "Don't we have chronic HHS funding issues each session, not mention the pending public school finance case hanging around? Throw in the *need* for increased infrastructure spending (roads!) and I don't see how we throw cash to those items and also cut some taxes. But they'll try. Bless their hearts."

• "1) It's not a 'surplus' if it's not enough to maintain the current level of services, to say nothing of getting us back to the halcyon days before the recession. 2) Increased spending is unavoidable, just to keep up with population growth and catch up on deferred maintenance. But there will be plenty of tax cut proposals - one or more of which are sure to pass."

• "1st, satisfy courts by funding schools. 2d, deliver red meat tax cuts. 3d, fill selected holes in budget."

• "There may be some spending adjustments for some things that did not get taken care of in the supplemental appropriations in 2013, but the surplus will provide an irresistible opportunity for the Legislature to gain headlines by cutting taxes."

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What is the Legislature likely to do with property taxes in 2015?

• "The cost of abolishing or replacing property taxes is just too high, and restricting appraisal increases has landmines of its own. So, a property tax cut is probably the easiest, most predictable, and maybe even the least expensive."

• "The easy fix is to restrict appraisal increases. I'd bet on that."

• "Nothing happens until the courts weigh in on school finance."

• "How about an increased homestead exemption for school taxes or an optional flat-dollar-amount homestead exemption for other local property taxes."

• "A new senate may be particularly interested in capping residential values, but business groups will point out that that just means an increase in taxes on them."

• "It's the 'something else' that has us all worried."

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With a budget surplus expected, do you think lawmakers will legalize any new gambling in Texas?

• "With an even more conservative House and Senate...hell no!"

• "If the Legislature hasn't done so in the face of shortfalls, why would they do it in a session when they have a surplus?"

• "Texans will keep on sneaking off to other states to play. There's little compelling need to expand gambling now."

• "Having lobbied gaming issues for 12 years I can tell you that budget surplus or budget shortfall, either way makes no difference at all. New gaming will never pass so long as the Tea Party has any significant influence. Tea Partiers don't care about the libertarian argument that gaming revenue is 'voluntary' by the person paying. They care that government should be as small as possible, and so they oppose ANY new revenue for the state. The threat of being primaried keeps moderate Republicans from giving any serious consideration to gaming, and Democrats hold a minority of seats in both chambers. Tell me again your plan for getting a 2/3rds vote in favor? The sad part is that this dynamic allows fundamentalist Christian groups to claim victory when in fact they did NOTHING since the fight never even got started."

• "The Oklahoma tribes have way too much money invested in Texas."

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If lawmakers did cut taxes, which taxes are they most likely to cut?

• "Follow the business donations"

• "The business franchise tax is most likely first in line to be cut (again), followed closely by a property tax cut. These two taxes have powerful political constituencies. The old workhorse sales tax will probably have to stay at 6.25% in order to cover the future costs of the cuts the legislature will bestow."

• "Sales is the natural tax to cut, because everyone pays it: business, consumers, visitors, residents, illegals, everyone. Everyone would get a little."

• "This might be the session where the mandate to use franchise taxes for school finance finally gets fixed."

• "Remember when the franchise tax mantra was low rate, broad base? Yeah, that's a thing of the past. They'll keep raising the exemption amount so only a small group of companies ever pay anything."

• "The sales tax offers too little to have any real impact. Something that impacts business and further adds to the business friendly climate will be the route taken."

Our thanks to this week's participants: Gene Acuna, Cathie Adams, Victor Alcorta, Brandon Alderete, Clyde Alexander, George Allen, Charles Bailey, Tom Banning, Dave Beckwith, Amy Beneski, Andrew Biar, Allen Blakemore, Tom Blanton, Chris Britton, David Cabrales, Raif Calvert, Kerry Cammack, Marc Campos, Thure Cannon, Snapper Carr, William Chapman, Elna Christopher, Kevin Cooper, Beth Cubriel, Randy Cubriel, Denise Davis, Eva De Luna-Castro, June Deadrick, Nora Del Bosque, Glenn Deshields, Holly DeShields, Tom Duffy, David Dunn, Richard Dyer, Jeff Eller, Jack Erskine, John Esparza, Jon Fisher, Neftali Garcia, Norman Garza, Dominic Giarratani, Bruce Gibson, Stephanie Gibson, Eric Glenn, Kinnan Golemon, Daniel Gonzalez, Jim Grace, John Greytok, Clint Hackney, Anthony Haley, Wayne Hamilton, Bill Hammond, John Heasley, Ken Hodges, Steve Holzheauser, Laura Huffman, Deborah Ingersoll, Cal Jillson, Jason Johnson, Mark Jones, Walt Jordan, Robert Kepple, Richard Khouri, Tom Kleinworth, Ramey Ko, Sandy Kress, Dale Laine, Nick Lampson, Pete Laney, Dick Lavine, James LeBas, Luke Legate, Leslie Lemon, Ruben Longoria, Matt Mackowiak, Luke Marchant, Steve Minick, Bee Moorhead, Mike Moses, Steve Murdock, Keir Murray, Nelson Nease, Keats Norfleet, Pat Nugent, Nef Partida, Gardner Pate, Jerod Patterson, Robert Peeler, Jerry Philips, Tom Phillips, Wayne Pierce, Allen Place, Kraege Polan, Jay Pritchard, Jay Propes, Ted Melina Raab, Tim Reeves, Patrick Reinhart, David Reynolds, Carl Richie, Jeff Rotkoff, Grant Ruckel, Jason Sabo, Luis Saenz, Andy Sansom, Jim Sartwelle, Barbara Schlief, Stan Schlueter, Bruce Scott, Robert Scott, Ben Sebree, Christopher Shields, Nancy Sims, Jason Skaggs, Ed Small, Martha Smiley, Larry Soward, Dennis Speight, Tom Spilman, Jason Stanford, Bill Stevens, Bob Strauser, Colin Strother, Sherry Sylvester, Jay Thompson, Gerard Torres, Trey Trainor, Vicki Truitt, Ware Wendell, Ken Whalen, David White, Darren Whitehurst, Woody Widrow, Seth Winick, Peck Young, Angelo Zottarelli.

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