House gives OK to tax bill as fight on others loom

PAUL J. WEBER,Associated Press



AUSTIN, Texas (AP) — A week that began with Gov. Rick Perry vowing not to sign a new state budget without tax relief ended Friday with the House tentatively approving one business tax exemption and Democrats protesting another on the way.

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Small businesses in Texas with less than $1 million a year in revenues would remain exempt from the state franchise tax under a bill that advanced in the House without debate. That relief is scheduled to expire this year unless the Legislature passes an extension.

But while that bill from Republican state Rep. Harvey Hilderbran drew no objections, another set to be laid out Tuesday by the chairman of the tax-writing House Ways and Means committee did.

That tax-cutting bill would cost the state about $397 million as currently written, and Hilderbran acknowledged Friday that the price tag could go higher as lawmakers tack on amendments between now and next week. But his refusal to put on a ceiling on how much tax relief the bill could pack roiled Democrats, who are leery of the cuts coming at the expense of state services.

“I’m working on a number and trying to keep that number,” Hilderbran said.

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The House passed a new $93.5 billion state budget last month that is now being negotiated with the Senate. Republican state Rep. Jim Pitts, the House’s chief budget-writer, acknowledged that the budget does not set aside any money for the tax bill.

A frustrated Rep. Yvonne Davis, who chairs the House Democratic Caucus, at one point said it was “ludicrous” that Republicans could not provide a set price tag for the bill or where the money would come from to pay for it.

Perry on Monday said he won’t sign a new state budget unless it came with tax cuts. He has proposed a $1.6 billion cut in business taxes. Last month, Perry called for a 5 percent reduction in business tax rates.

Under another bill overwhelmingly approved Friday, the House voted to extend the Texas Economic Development Act that gives tax breaks to companies and wind farm projects. The state comptroller reports that 128 projects invested so far under the program pack $62.4 billion investment.

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Critics say the plan needlessly subsidizes companies and cuts property taxes to school districts by $4.4 billion.