Ellis: SB 1 Crushes Texas Schools, Creates More Deficits in 2013

(Austin, Texas)—Senator Rodney Ellis (D-Houston) today voted against SB 1 as damaging to Texas schools and again called for a more responsible budget. Ellis offered amendments to remove costly tax loopholes — such as the high cost gas and early filer exemptions.

“We had another chance to get it right and failed,” said Ellis. “The Senate has voted for big oil companies and retailers and against Texas school children. The Senate voted for smoke and mirrors and to carry over huge deficits into the next session and to use the Rainy Day Fund to pay those bills and leave us unable to make the investments we need to win the future.”

“We have set the precedent that the Rainy Day Fund cannot be used even under the most dire fiscal circumstances,” continued Ellis. “We are balancing the budget by pretending we will get money from the federal government, by passing the buck down to local governments, or just by kicking the can down the road with deferrals. It is dishonest, immoral and Texas families will pay the price.”

SB 1 is full of one-time accounting tricks that will dig a deep hole for the 83rd Texas Legislature, including:

* $2.3 billion deferral of the August 2013 Foundation School Program payment;

* $403 million deferral of the July and August 2013 motor fuel tax transfers;

* $231 million for advanced collection of sales taxes;

* $67 million for advanced collection of motor fuels taxes; and

* $17 million for advanced collection of alcohol taxes

The main purpose of SB 1, other than to provide a vehicle for the school finance changes, is to carry forward the deficit and put off true tough decisions until January 2013. This bill provides exactly how $4 billion in cuts to public education will be spread amongst our school districts.

For Houston-area school districts, this means:

* $205 million less for Houston ISD

* $23 million less for Alief ISD

* $45 million less for Fort Bend ISD

* $3 million less for North Forest ISD

* $3 million less for Stafford MSD

The school-finance deal marks a retreat from the state’s commitment to the education of Texas schoolchildren. The budget projects that the percentage of campuses meeting the federal “adequate yearly progress” standard will drop to 61 percent by fiscal 2013 from the current level of 85 percent. The performance target for graduation rates is expected to rise a paltry one-tenth of 1 percent from fiscal 2012 to fiscal 2013, to 81.1 percent. At that pace, it would take our schools 90 years to bring the graduation rate up to 90 percent.

Ellis amendments would have:

1. Ended the huge giveaways to business, like the early filer tax break. Texas gave retailers a tax break of over $200M last year simply to file their sales tax on time. We gave them another $200M to file them early, and we gave another $65 million to businesses who pay their fuel taxes on time. There shouldn’t be such a huge reward for doing what you are supposed to do.

2. Eliminated the so-called “high cost” natural gas tax loophole. Texas gave away over $7.4 Billion in tax giveaways from 2004-09 to Natural gas producers who already profit in the billions, because their lobbyists have been able to maintain an antiquated definition of “high cost” gas in the code. From new drills established in 2009 alone, we will lose another $7.9B over the next 10 years.

This ‘tax incentive’ was created in 1989 to help companies with the costs of drilling high cost wells, which made sense then, but now virtually every new well produced is a so-called ‘high cost’ well. Mom and Pop producers are not getting this tax break, major oil companies are. One huge oil company saved $113.8 million in FY 2010, while reporting net profits of $4.6 billion. A subsidiary of another of the world’s largest oil companies saved $113.2 million.

“We could have budgeted responsibly. We could have acted responsibly by getting rid of tax loopholes that rip-off Texans and benefit those already making out like bandits,” said Ellis. “There are many things we could have done that would have made these accounting tricks unnecessary and would not leave another huge deficit for future legislature.”

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