Issues: Budget & Taxes

2015 Legislative Update

Dear Friend:

Before any more of 2015 passes us by, I want to take a moment to reflect on this year’s legislative successes and the many challenges that still remain.

Texas works best when everyone, regardless of race, gender, or who they love, gets a fair shot and plays by the same rules – goals that will set our state on the path to progress and equality of opportunity for all. While we took some steps in the right direction, the legislature missed far too many opportunities to create better schools for our children, make college more affordable, close corporate giveaways and create better paying jobs for hardworking Texas families, provide access to quality, affordable health care, and work toward a fairer criminal justice system.Ellis NL 2015 final-page-001

I’m disappointed where we fell short, but I’m looking forward to continuing to fight for policies that make our communities and democracy stronger.

Recent tragedies in Waller, Charleston, Ferguson, and elsewhere are an unfortunate and sobering reminder of how far we still have to go to create a state and nation as good as their constitutional promise. We have work to do. But as heartbreaking as those events have been, I remain dedicated to pushing forward. The successes from this past session and throughout our history confirm that when we are willing to dedicate ourselves and work together toward a common goal, we can move Texas and the nation in the right direction.

I want to take this opportunity to share my 2015 Legislative Update with you. In the update, you can read about my efforts to stand up for the people of Senate District 13. We did not succeed at every turn, but I remain as committed as ever to advancing worthy causes that ensure every family, in every community, has the opportunity to succeed and be a strong voice in our democracy.

As always, it’s a pleasure representing the constituents of Senate District 13, and I look forward to continue fighting for you.

Sincerely,

Rodney Ellis


Highlights from the Legislative Update

Investing in our future

The budget is the one bill the legislature is constitutionally required to pass. It’s often referred to as a moral document, as where the state invests shows where its priorities lie. With a large surplus and a long list of neglected needs, Texas had a unique opportunity and responsibility to build a better future for our state and make fiscally responsible investments in the vital needs of Texas.

Unfortunately, the final budget only took halting steps in that direction. It includes increased funding for mental health services and reduced waiting lists for programs that serve Texans with disabilities and their families. It also increased funding for TEXAS Grants, the financial aid program Senator Ellis created in 1999 that has helped over 432,000 Texans pay for higher education.

Committee

But the budget can also be described by what’s not in it. Instead of investing in better educational opportunities by reducing the overcrowding in our classrooms, paying teachers a fair salary, and funding full-day pre-kindergarten, the legislature hoarded $18 billion and refused to invest it in our state’s future. Instead of investing in a stronger economic future for all Texans by making college more affordable and fixing our overcrowded and crumbling roads, the legislature chose to spend their time and money on tax giveaways for companies that spent millions lobbying the Capitol. Texans deserve better.

A fairer justice system

Our criminal justice policies should effectively improve public safety, efficiently utilize taxpayer dollars, and treat all people and communities equally and fairly. That seems basic enough. But Texas has historically been criticized for its wasteful, ineffective, and overly “tough” approach to criminal justice that has too often relied on mass incarceration first and asking questions later.

Fortunately, the legislature took some important first steps to create a fairer and more accurate criminal justice system. After 14 years of struggle, Senator Ellis and Representative Ruth Jones McClendon were finally able to pass a bill creating an exoneration review commission to study wrongful convictions. Texas takes away the liberty of more citizens through incarceration than any other state. With that power comes the responsibility to make sure we are locking up only the guilty, protecting the innocent, and continuing to make our justice system as reliable, fair, and effective as possible.

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The bill creates the Tim Cole Exoneration Review Commission to bring together trusted criminal justice experts to review proven wrongful convictions, identify the main causes of those convictions, and recommend more reliable practices to improve public safety and prevent such tragedies from reoccurring in the future. Prior to the bill’s passage, when an innocent person was wrongfully convicted, our system did not have any institutional mechanism to evaluate the conviction, identify what went wrong, and correct those mistakes to ensure it does not happen again.

There were other successes. The legislature ended the broken “key man” – or “pick-a-pal” – grand jury system in Texas and required grand jurors in most cases to be picked randomly, just as we select trial jurors. It also passed legislation to promote and expand the use of police officer body cameras, complete with proper checks and balances on their operation and accessibility. Finally, the legislature reformed the state’s truancy system that had resulted in thousands of Texas children with criminal records simply because they couldn’t afford to pay their fines.

However, it failed to take action on numerous measures that would have reduced Texas’ overreliance on mass incarceration, reduced racial disparities in our justice system, and made our communities safer. This shows there’s still a long way to go to have the justice system Texans expect and deserve. With the news of continued injustices in Waller, McKinney, Baltimore, Ferguson, and elsewhere, there are still essential reforms that are needed to close the gap between the constitutional promise of equal justice under the law and the unfortunate reality of disparate justice in too many of our communities.

Strong community schools

Attending high-quality pre-kindergarten has a lasting impact on a child’s success both in school and life. Early childhood education creates learning foundations and allows students from all backgrounds to establish the skills that will last the rest of their lives. Children who attend high-quality programs are less likely to be held back a grade, less likely to need special education, and more likely to graduate from high school. The legislature passed legislation promoting high-quality pre-kindergarten, but the bill unfortunately does not expand the eligibility of pre-k – something Senator Ellis has long advocated for. Additionally, following up on reforms from 2013, the legislature took further steps to scale back the use of high-stakes tests, and pseudo-reforms like vouchers and efforts to privatize our community schools were killed.

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Unfortunately, despite a court decision finding Texas’ public schools are woefully – and unconstitutionally – underfunded, the legislature took no steps to address the funding inadequacy. Instead, the state budget’s funding for public education does not even keep pace with inflation and leaves neighborhood schools struggling with overcrowded classrooms and underpaid teachers.

Without adequate and equitable funding, it becomes extremely difficult to provide children from all neighborhoods with equal educational opportunities. Effective teachers, small class sizes, and intensive interventions for struggling learners all require investment and have been proven to deliver results. It shouldn’t take lawsuits to solve a problem that affects so many Texas families. Weakening the state’s investment in schools and failing to find a permanent solution to this critical challenge only makes the lives of Texas students, families, and teachers that much harder.


Application for Spring 2016 Texas Legislative Internship Program released

Earlier this week, I released the application for the Spring 2016 class of the Texas Legislative Internship Program (TLIP). TLIP is an educational internship program sponsored by my office and administered by Texas Southern University. TLIP provides opportunities for undergraduate and graduate students to serve as interns in the Texas Legislature, various state agencies, and local government. Applications are available on my website and must be submitted by October 30, 2015.

I was inspired to create TLIP in 1990 because my mentor, the late Congressman Mickey Leland, stressed the importance of using one’s individual success to provide opportunities for others. As Leland’s Chief of Staff, I established an internship program in Congressman Leland’s office and carried on that tradition when elected to public office.

TLIP shot

What began as a small group of students 25 years ago has blossomed into one of the most successful legislative internship programs in the nation. TLIP has provided more than 670 students valuable experiences in the Texas Legislature, the offices of the Texas Governor, Lieutenant Governor, and the Chief Justice of the Supreme Court, city and county offices, and even Texas Monthly magazine. Past TLIPers have gone on to work in the White House, Congress, various state agencies, and the private sector, and three – Ana Hernandez, Armando Walle, and Ron Reynolds – are current members of the Texas House of Representatives.

The 65 interns in the Spring 2015 class worked in offices both inside and outside of the Texas Capitol, including the Governor, Lieutenant Governor, Speaker of the House, Texas Supreme Court, Senators, Representatives, advocacy organizations, and elsewhere.

Students receive a minimum of six and a maximum of fifteen academic credit hours for participating in the program, which combines academic study and research with supervised practical training. Undergraduate and graduate students interested in the political process and the kind of humanitarian service exemplified by Congressman Leland are encouraged to apply for admission to TLIP. A TLIP internship lasts for one academic semester, provides a $7500 stipend, and affords students an opportunity to experience public service firsthand.

To learn more about TLIP, please visit www.rodneyellis.com/tlip or call my district office at (713) 236-0306.

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Fighting for opportunities for all Texas families

Dear Friend:

We deserve a Texas that ensures that all hardworking families can earn a decent living, afford high quality health care, and get a great education for their children.

By investing in better schools and improving educational opportunities for our children, closing wasteful corporate loopholes and relieving the unfair tax burden on Texas families, ensuring better paying jobs and fair and equal treatment in the workplace, and providing access to affordable and quality healthcare, we can reduce inequality, create better paying jobs, and build an economy that works for all Texas families.

Our state works best when every Texan gets a fair shot, everyone does their fair share, and everyone plays by the same rules. Working together we can make our state a better Texas.

Last week, we had the opportunity to do just that when the Texas Senate passed its version of the state budget. We had a unique opportunity and responsibility to build a better future for our state and make the fiscally responsible investments in the vital needs of Texas. We had a chance to build better schools for our children, better roads for our communities, better jobs for working Texans, and ensure Texas families have the competitive economic future they deserve.

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But unfortunately, those needs largely weren’t addressed in the Senate’s budget. This reflects the fact that dialogue in the Capitol this session has been more about scoring political points than building a better future for the people of Texas, investing in Texas families, and strengthening the Texas economy for the long term.

Even business leaders asked us to do more, urging legislators in a recent letter to invest in the needs of this state before we miss our opportunity to meet the challenges of the future:

Our state government has a substantial budget surplus today largely because of the resurgence in the oil and gas industry and the taxes that our base industries have paid. For once in a generation, you have an opportunity to make progress on the issues that confront our state—congested roads, educational challenges, obsolete infrastructure, high debt and underfunded pensions to name a few. To continue our economic success and job creating machine, we need to address those challenges and protect our business climate.

The budget did not do enough to meet those challenges, but I voted for it because there are still incremental steps taken in the right direction. Steps like increased funding for TEXAS Grants, the financial aid program I created in 1999 that has helped over 432,000 Texans pay for higher education, and new money for mental health services help to address long-term needs in the state.

But there is still a great deal of work to be done.  As the budget is negotiated over the final month of session, I will continue to fight for all hardworking Texas families. That’s why this Ellis Express, sent in the spirit of enhancing economic opportunity for all Texans, will discuss on several of the priorities I’ve been focusing on this session.

Honoring hard work with honest pay

Minimum Wage

Texans believe in honoring hard work with honest pay. Unfortunately, hardworking Texans are finding it more difficult to make ends meet – even those working fulltime. In 2013, Texas had the highest number of minimum wage workers in the country and the fifth-highest percentage of workers making at or below the minimum wage. Despite the perception, these aren’t just college kids and part-time workers: these are everyday Texas families who are working hard to put food on the table. Nationally, the average age of someone earning the minimum wage is 35, and more than half work full-time schedules.

Today, the minimum wage of $7.25 per hour yields an annual income of only $15,080 for full time work, which is below the federal poverty line for a family of two or more. This was not always the case: throughout the 1960s and 1970s, a full-time, full-year minimum-wage income was above the poverty line for a family of two.

But the minimum wage has failed to maintain its buying power. The minimum wage of $1.60 an hour in 1968 would be $10.75 today when adjusted for inflation. The result is a growing gap in our society between those who have the most and everyone else. Our state has the fifth worst income gap in the country, with the top 1 percent of the population taking home 21 percent of state income. This trend is exacerbated by stagnating wages, which have not grown in nearly a decade.

While Texas continues to utilize the lowest minimum wage allowable under federal law, 24 states have already set an hourly wage floor higher than this.

How can people be expected to climb the economic ladder if they are not given fair wages for their work? I hear from so many constituents who work hard and play by the rules, but they’re still unable to make ends meet. So this session, I filed two bills related to the minimum wage to help those constituents and millions of other Texans.

SB 67 increases the state minimum wage to $10.10, which will help hardworking families rise out of poverty without requiring a single dollar in new taxes or spending. Raising the minimum wage provides hardworking Texans with income to spend on the basics they need. This, in turn, boosts our economy and eases the burden on taxpayer-funded services. It’s a win-win, with almost 2.4 million Texans receiving a pay increase. A recent study by the Center for Public Policy Priorities shows exactly who would benefit from a $10.10 minimum wage, including:

  • Age: 60 percent are in their prime working years of 25 to 54, and only 3.1 percent are teenagers between the ages of 16-18.
  • Families with children: Nearly fifty percent live in households with children, and 14.7 percent of all workers who benefit are single mothers.
  • Education level: 43 percent have at least some college education, and 15 percent have completed a postsecondary degree.

As an alternative to a statewide increase in the minimum wage, SB 68 gives cities and counties the ability to raise the minimum wage themselves. Texas is an enormous state, and local economic needs vary from place to place. Allowing cities and counties the option to increase the minimum wage on their own will provide the same benefits to the areas that choose to take a stand for living wages.

Equal Pay

Women make up nearly half the workforce in the United States, and they are the equal or main breadwinner for four out of ten families. Yet in Texas, the median full-time pay for a woman is $33,689 per year; for a man, $42,044. Even when working full-time and year round, Texas women are paid about 82 cents for every dollar paid to men. This amounts to a yearly gap of $7,859 between men and women.

The gap is even more pronounced when race is added as a factor: African-American women earn only 59 cents per dollar and Hispanic women earn just 45.3 cents per dollar when compared to men.

The continued pay gap between women and men is an enduring shame in our society. This is not merely a philosophical issue – it is a serious economic shortcoming that has impacted the livelihoods of hardworking Texas families and our communities for too long.

I’m proud to partner with my friend and colleague Rep. Senfronia Thompson to give Texas women another tool to fight wage discrimination. The federal Lilly Ledbetter Fair Pay Act of 2009 gave American women an avenue to challenge wage discrimination, but Texas’ lagging equal pay laws force our citizens to fight for wage equity in federal courts – typically more expensive for both plaintiffs and defendants than state courts.

SB 65 gives Texas women the ability to challenge discriminatory wage practices in local courts, with locally elected judges, and local juries. Equal pay for equal work shouldn’t be a controversial subject, so it’s time to ensure our mothers, sisters, and daughters have every opportunity to protect their right to earn a competitive salary.

Access to affordable and quality health care

Everyone has the right to affordable health care, and the contents of one’s wallet should not determine the quality of one’s care.  Unfortunately, our state continues to refuse to expand Medicaid under the Affordable Care Act, preventing over one million hardworking Texans from accessing quality, affordable health care, and making it tougher for Texas families to put food on the table.

Medicaid Expansion

Texas has the highest rate of uninsured in the country, with one in four Texans living without health insurance. Despite this shameful reality, our state continues to refuse to expand Medicaid under the Affordable Care Act, preventing over one million Texans from accessing quality, affordable health care. Not only does it make good moral sense to ensure that your ability access health care isn’t dependent on your bank account, but it’s a great opportunity to create more good paying jobs for Texans and grow our economy.

Studies show just how good a deal expanding Medicaid would be for Texas. According to an economic analysis by the Perryman Group, Medicaid expansion would generate over 300,000 Texas jobs per year over the first ten years. Texas would see a return of $1.29 for every $1 spent on Medicaid expansion, and the burden on local governments would be reduced by $1.21 for every dollar the state spent on expanding the program.

Last week, I tried to address this crisis on the Senate floor by offering a floor amendment to expand Medicaid in Texas. My challenge to help those without health insurance in Texas was unfortunately voted down along party lines.

The amendment would have closed the current coverage gap and secured aid for what local taxpayers pay for already: the costs of uninsured Texans who show up in our doctor’s offices and emergency rooms. Accepting $100 billion in federal funding to address the gap of affordable health care options for our constituents is just common sense.

Everyone has the right to affordable health care, and the contents of one’s wallet should not determine the quality of one’s care. Expanding Medicaid will reduce local property taxes, create jobs, and provide affordable and quality health care to a million Texans. I will continue fighting and working to convince my colleagues that it is the right thing to do.

Opening educational opportunities

There is no greater way to create better economic opportunities for all Texans than ensuring that every child has access to quality and affordable educational opportunities.

Investing in public education

The state’s 2012-13 budget slashed over $4 billion in state funding from Texas schools and eliminated another $1 billion in public education grants. These cuts meant fewer teachers, crowded classrooms, eliminated bus routes, cuts to extracurricular activities, and more.

Fortunately, our schools fought back against these draconian cuts and the school finance system as a whole. Hundreds of school districts across Texas joined together to fight for their students and the need to adequately and equitably fund public education, arguing that Texas school children and taxpayers are being treated unfairly by the current public school finance system.

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Last year, three years after the legal challenge was first filed, the judge agreed with the schools’ arguments and ruled that Texas’ school finance system was unconstitutional. The decision has been appealed to the Texas Supreme Court, and it may be until 2016 before the court issues a ruling.

For too long, Texas’ school finance system has always been patched rather than perfected, as legislators are seemingly content to see it sputter along another two years in spite of overcrowded classrooms and underpaid teachers. The legislature should treat investing in our children’s schools like what it is: an emergency that must be solved immediately.

Money does matter, after all.  Effective teachers, small class sizes, and intensive interventions for struggling learners all cost money and have been proven to deliver results.  Accountability systems from Austin and Washington, D.C. increase expectations and punish schools that fail to meet them.  Schools’ energy, transportation, and health care costs continue to grow rapidly.  Properly funding public education is not an extravagance – it is an obligation we must meet to ensure the future success of our state.

College affordability

All hardworking Texas families should have the opportunity to compete for the jobs of the future, but the rising cost of higher education is pricing many out of that dream. Texas’ failure to invest in providing access to affordable higher education is pushing families to incur enormous debt and pricing others out of higher education altogether. In fact, student loan debt has surpassed credit card debt as the second-largest form of household debt, trailing only mortgage debt

Before 2003, the legislature set tuition rates at public universities. That year, in response to a budget shortfall, the legislature changed the law – something I voted against – allowing colleges and universities to raise tuition on their own and shifting costs away from the state and onto families’ backs. Since then, the average cost of attending a public university in Texas has more than doubled.

Texas’ total growth in tuition and fees since deregulation is the 5th highest in the nation, making it harder for students to attend the schools that were built to serve them.

To fix this problem, my bill to cap tuition, SB 255, was heard last week in the Senate Committee on Higher Education. My bill caps tuition at the amount charged during the 2015-16 school year and returns authority to set tuition rates to the legislature. Any increases in tuition after that point will be legislatively authorized, giving Texans a place to voice their displeasure with tuition rates: the ballot box. SB 255 will rein in costs for students and families and make the legislature accountable for funding of higher education.

Protecting families from predatory lending

Payday lending and auto title loans rely on high-interest rates to trap low-income Texans in a vicious cycle of debt. With no fee or rate caps, these loan products carry annualized percentage rates upward of 600 percent. These lenders drain $1.25 billion from our state annually and exacerbate the burden on already over-stretched charitable and social service providers. What’s more, over 74,000 cars have been lost to these businesses over the past two years, making it difficult for these Texas families to even get to work and school, much less get ahead.  Business as usual for predatory lenders is bad for Texas families.

Senate District 13 is a particular hotbed for these questionable practices. Houston has more than 550 payday and auto title storefronts that bleed around $240 million from the Houston economy annually.

Reforming this system is in the interest of all Texans. In fact, statewide polling shows that 75 percent of Texan voters, across party lines, support meaningful reform of these high-cost, short-term loans. Yet last session, industry lobbyists blocked the reform bill the legislature tried to pass. To fight back, I filed two pieces of legislation that will rein in payday lending abuses.

SB 91 would limit annual interest rates for payday and auto title loans to 36 percent. Federal law already protects military borrowers from triple digit interest rates by limiting loans to a 36 percent cap, and it’s time to extend the same protection to all Texas families.

SB 92 implements numerous reforms to provide fair lending practices to all consumers, making payday loans more affordable to ensure successful repayment in a shorter period of time. Texas cannot continue to allow these predatory lenders to go unchecked, and SB 92 puts in place a number of statewide protections already offered in some of the state’s largest cities.

Closing wasteful corporate loopholes

Review Texas’ tax loopholes

Texas spends billions of dollars on corporate loopholes for special interests without any transparency or accountability. With a tax system rigged with tax breaks and loopholes that only benefit a few, the burden gets shifted onto the backs of Texas families.

These aren’t small numbers we’re talking about: tax exemptions in Texas’ tax code will total at least $54.2 billion in 2015 alone, yet there is no regular assessment to determine the loopholes’ effect on job creation, their cost to the state, and their effect on Texas’ tax burden.

The sad truth is that perks, tax breaks, and loopholes have perverted our tax system and made it blatantly unfair for the average Texas family. That’s why I’ve filed legislation to scrub scores of preferential tax breaks in the Texas tax code. State agencies are subjected to a sunset review every 12 years to determine if their functions need to be continued. The tax code would benefit from a similar periodic review of all its exemptions, exclusions, and special treatments to answer one simple question: are they working?

Texas’ population is predicted to almost double over the next 50 years. That enormous influx of new Texans, both from migration and natural population growth, will require significant investment in our state’s infrastructure. Everything – from our water resources to transportation needs to the number of classrooms – will have to grow to meet our burgeoning population. It’s crucial we meet this need, and to do so we must ensure that our tax dollars are being used as smartly as possible.

SB 80, my bill to review Texas’ tax loopholes, was heard this week in the Senate Committee on Finance. The legislature talks a lot about transparency in the budgeting process, and this bill applies that same principle of transparency to the loopholes that get added to our tax code every session.

Property tax fairness

In a session where we are looking to provide tax relief, we can easily provide hardworking Texas families the property tax relief they deserve – while also protecting crucial resources for our schools, roads, and other priorities.

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Under Texas property tax law, all properties are supposed be taxed at 100 percent of their market value so that all Texans are treated equally. Unfortunately, many large commercial and industrial property owners exploit a loophole in the law and avoid paying their fair share of taxes. The result? Hardworking Texas families and small businesses are being forced to pay higher taxes to make up the difference, and crucial resources are being siphoned away from our schools and our hospitals to subsidize these tax breaks for the state’s largest and wealthiest corporations.

Over the last five years, commercial owners’ manipulation of this property tax loophole has diverted billions of dollars from our schools, cities, hospitals, and community colleges, and Texas families have had to carry the burden of approximately $5.6 billion more in property taxes.

By simply closing this loophole we can create a more fair and transparent property tax system, provide Texas families, homeowners and small businesses the much needed tax relief they deserve, and ensure our schools and hospitals receive the resources they need.

As the 84th Legislative Session enters its final month, I hope you will continue to stand with me as we try to steer Texas onto a brighter path. All hardworking families should be able to earn a decent living, afford high quality health care, and get a great education for their children. We have a common responsibility to ensure the Texas of tomorrow is the best state it can be, and there is no better time to rededicate ourselves to moving Texas forward.

Sincerely,

Rodney Ellis

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Sen. Ellis reacts to passage of SB 9

(Austin, TX) // Senator Rodney Ellis (D-Houston) releases the following statement regarding the Senate passage of SB 9, the bill that further restricts the constitutional limit on the rate of growth of appropriations:

“We have vital, unmet needs in our state:  overcrowded schools, underpaid teachers, crumbling infrastructure, and the highest uninsured rate in the nation,” said Ellis. “Instead of meeting those needs, SB 9 will further restrict future legislatures from investing in the next generation of Texans.”

“Texas already ranks 48th in per capita state spending. Rather than cutting critical investments even more, we should take the opportunity to invest in better schools and educational opportunities for our children, better paying jobs for hardworking Texas families, and the 21st century infrastructure to stay competitive in the 21st century economy.”

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Sen. Ellis: Meet the state’s needs before cutting taxes

(Austin, TX) // Senator Rodney Ellis (D-Houston) releases the following statement regarding today’s debate on a number of tax cut bills.

“I’m for responsible tax fairness as much as anyone in the Senate,” said Senator Ellis. “But we need to be fiscally responsible and thoughtful about the economic future of our state before we rush to spend billions of dollars today. We have the opportunity and responsibility to invest in better schools and educational opportunities for our children, better paying jobs for hardworking Texas families, and the 21st century infrastructure to stay competitive in the 21st century economy.”

“In 2011, we asked the people of this state to endure tough sacrifices and made drastic cuts to vital needs in this state. We slashed critical resources for schools, health care, transportation, and other integral part of a healthy economic future. Now we have the resources to restore those cuts. We have the opportunity and responsibility to make up the damage we inflicted on hardworking Texas families.”

On Friday, March 20, 2015, a group of business trade associations made a similar argument in a letter sent to the Texas Senate. The group argued that “[f]or once in a generation, you have an opportunity to make progress on the issues that confront our state – congested roads, educational challenges, obsolete infrastructure, high debt and underfunded pensions to name a few. To continue our economic success and job creating machine, we need to address those challenges and protect our business climate. If there is money left over, it is appropriate to consider tax relief.”

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Sen. Ellis files bill to reform Texas’ property tax appraisal system

(Austin, TX) // Senator Rodney Ellis (D-Houston) releases the following statement regarding Senate Bill 1084, his bill to create a fairer property tax appraisal system in Texas:

“Homeowners and local communities across Texas are shouldering an unfair burden when large commercial property owners manipulate the property tax system to drive down their property values and property tax bills,” said Senator Ellis. “While most homeowners pay taxes on the real value of their property, many large commercial property owners routinely use appeals and lawsuits to avoid paying their fair share. When large commercial property owners shirk their responsibility, ordinary homeowners pay more property taxes to make up the difference. That’s not fair, it’s bad public policy, and it needs to change.”

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SB 1084 closes the loophole related to how owners of business properties worth more than $1 million present their cases in court. No longer can lawyers for these property owners game the system, “cherry-pick” properties, or make adjustments that do not follow generally accepted appraisal techniques just to drive down their appraised value. Instead, they must select a reasonable and representative sample of comparable properties located within the county and based on similarities in location, square footage, age, and other conditions.

Relief can only be granted by a court if the appraisal ratio of the property exceeds the median appraised level of the comparable properties by 10 percent.

The bill also requires the Comptroller to adopt rules that establish standards for the equal and uniform appraisal of industrial, petrochemical refining and processing, and utility properties. Lastly, the bill allows courts to award attorney’s fees to appraisal districts that establish that the property in litigation was appraised in an equal and uniform manner.

The Legislative Budget Board examined the issue in the agency’s January 2015 Texas State Government Effectiveness and Efficiency Report. SB 1084 is based on LBB recommendations, as well as numerous meetings with homeowners, appraisers, counties, and cities around the state.

Photos from today’s press conference can be viewed and downloaded here. Video of the press conference can be viewed here.

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Sen. Ellis and Rep. Bohac file bills to expand Texas’ sales tax holiday

(Austin, TX) // Today, Senator Rodney Ellis (D-Houston) and Representative Dwayne Bohac (R-Houston) held a press conference to discuss SB 426 and HB 1087, companion bills to expand Texas’ sales tax holiday.

“It’s time to bring the sales tax holiday into the 21st century,” said Senator Ellis. “Texas needs to increase the sales tax holiday amount and add the electronic devices that our students regularly use to succeed in the classroom. As long as tax cuts remain on the agenda this session, I intend to fight for tax cuts that will go straight to families’ pockets. After all, the sales tax holiday means real tax relief for those who need it most.”

“I am committed to making tax relief for hardworking families a priority this session,” said Representative Bohac. “Preliminary budget proposals have afforded us the opportunity to offer meaningful tax relief for consumers, homeowners and business owners.  Over the years, the back-to-school sales tax holidays have offered  consumers significant spending relief, but we need to make it reflective of ‘inflation creep’ and modernize it to represent what students and consumers are buying in 2015.  I am happy to have worked with Senator Ellis to get backpacks added to the list of tax exempt items, but now we have to work to help fill them with the electronics that the 21st century classroom requires.”

Sales Tax Exemption Press Conf

The bipartisan bills will help Texas families save money on sales taxes in two ways. First, the bills increase the sales tax holiday’s purchase limit amount for clothing, shoes, backpacks, and school supplies from $100 to $200. The $100 amount for clothing and shoes has not been changed since the holiday was originally created in 1999, and increasing the amount will allow families to continue to utilize the sales tax holiday for items that have substantially increased in cost over the past 16 years.

Second, the bills will add certain electronic devices to the list of items that are tax-free during the sales tax holiday. This includes e-readers, personal computers, and tablet computers. Today’s students rely on much more than pens, paper, and calculators to get prepared for school.

Both members have a long history of working to provide tax relief for Texas families through the sales tax holiday. In 1999, Senator Ellis passed SB 441, which created the back-to-school sales tax holiday for shoes and footwear. In 2007, Senator Ellis amended HB 3314 to add backpacks to the list of items eligible for the sales tax holiday. In 2009, Representative Bohac passed HB 1801, which added school supplies.

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Sen. Ellis on Texas’ school finance ruling

(Austin, TX) // Today, Senator Rodney Ellis (D-Houston) released the following statement:

 “For too long, Texas has operated as a government by lawsuit: the biggest, most difficult issues facing our state are only addressed when mandated by a court,” said Sen. Ellis. “The school finance system has always been patched rather than perfected, as legislators are seemingly content to see it sputter along another two years in spite of its obvious inequities.”

“Now that our school finance system has once again been ruled unconstitutional, you may hear some elected officials claim that the legislature cannot act until after the case has been appealed to the Texas Supreme Court and the nine justices have had an opportunity to rule. I firmly disagree.”

“The legislature should treat the underfunding of our children’s schools like what it is: an emergency that must be solved immediately. In fact, there’s ample precedent for us working to solve this issue prior to the Texas Supreme Court weighing in. In 2004 and 2005, the last time the constitutionality of Texas’ school finance system was in court, the legislature worked on school finance for three special sessions and one regular session – all before the Supreme Court finally ruled the system was unconstitutional.”

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Ellis: Expand Special Session Agenda to include Priorities Texans Care About

(Austin, TX)Senator Rodney Ellis (D-Houston) today sent the following letter to Governor Rick Perry asking him to add reviewing tax loopholes, Medicaid expansion and college costs to the special session agenda:

June 11, 2013

Governor Rick Perry
Office of the Governor
P.O. Box 12428
Austin, Texas 78711

Dear Governor Perry:

The 83rd Legislative Session closed with work still left to be done on several important issues beyond just redistricting. As you consider adding additional subjects to the special session agenda, I hope you will keep an open mind and ask the legislature to find solutions on cataloging and reigning in wasteful tax expenditures, expanding access to affordable health insurance, and making college more affordable to Texas families.

As you proudly point out, Texas continues to grow rapidly, with more and more Americans and businesses choosing to make our state home. But that growth comes at a cost, as more people mean more schools, more roads, more hospitals and more services. Texas is at a budget crossroads; tax increases are ruled out, so each session we struggle to find the revenue to meet our growing needs and to invest in the very things that will continue on our success. With these challenges, it is critical that we know exactly how every tax dollar is used. To this end, I urge you to add review of over $44 billion in state and local tax loopholes to the special session call.

During the session, the Senate unanimously approved just such a study to identify and review Texas’ tax preferences, ensure that they are carrying out their intended purposes, and advance more efficient and effective economic policy. Unfortunately, this provision was removed in the dead of night, protecting these special interest tax subsidies in a cloak of darkness and secrecy while adding hundreds of millions of more tax giveaways to the code. It is time to shine the light on these loopholes, but it will require your assistance and leadership.

Another challenge that will determine Texas’ future success is addressing the staggering health care crisis facing our state. Texas has the highest uninsured rate in the nation, with one in four Texans lacking any health insurance at all and, according to a new report, 54 percent lacking any meaningful coverage. There are more uninsured in Texas – 6,080,000 – than the entire populations of Alaska, Delaware, the District of Columbia, Montana, North Dakota, South Dakota, Vermont and Wyoming combined – 6,021,410. And our Medicaid program currently spends less than the national average per enrollee and also reimburses doctors, hospitals and other providers less than the national average. We can provide insurance to 1.5 million Texans if we act now on the Affordable Care Act, but we must get to work now.

Providing health care access to 1.5 million Texans does not just make moral and social sense, it makes economic sense. Two recent studies show just how good a deal expanding Medicaid would be for Texas. According to an economic analysis by the Perryman Group, Texas would see a return of $1.29 for every $1 spent on Medicaid expansion, and the burden on local governments would be reduced by $1.21 for every dollar the state spent expanding the program. Furthermore, Medicaid expansion would create approximately 300,000 Texas jobs per year for the next decade, and will reduce the $5 billion per year Texas hospitals pay in uncompensated care. These costs are currently passed on to all Texans in the form of higher prices, as well as a direct tax in areas that have hospital districts. I hope you will address this crisis by adding this important issue to the special session call.

Finally, the rising cost of college continues to be a serious challenge to Texas families. Since tuition deregulation was passed in 2003, the cost of tuition and fees at state colleges and universities has increased by 90 percent, and has risen even more at some of our top institutions.

While some of us warned this would be the outcome, those who supported tuition deregulation assured Texans price spikes would not happen. It is past time for the legislature to stop abdicating its responsibility to Texans on higher education and make the tough decisions on tuition. I believe there is more than enough support in the legislature to explore new ideas on college affordability and end tuition deregulation.

I know you believe that tuition deregulation was the right thing to do in 2003, but it has long since outlived its usefulness and has become a significant barrier for Texans trying to afford college. I urge you to add a review of tuition deregulation and college affordability measures to the special session call.

I sincerely hope you will take these important issues into consideration as you deliberate whether to expand the call for the 1st Called Special Session of the 83rd Texas Legislature. Hard-working Texans deserve no less than a full and open debate on these critical matters.

Sincerely,

Rodney Ellis

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Ellis Plan to Review Tax Loopholes Passes Senate

Amendment to HB 3390 to requires Comptroller, Legislative Budget Board to review loopholes and preferences

(Austin, Texas)// Senator Rodney Ellis’ plan to identify and review Texas’ tax preferences, ensure that they are carrying out their intended purposes, and advance more efficient and effective economic policy was passed by the Texas Senate. Ellis’ plan, SB 140, was attached to HB 3390 by Senator Bob Deuell (R-Greenville), legislation to extend property tax abatement agreements.

“The Texas tax code is riddled with tax subsidies, giveaways and loopholes that were put in place years ago by special interests and have never even been reviewed,” said Ellis. “It is such a problem that, despite repeated requests to numerous agencies, no one at the state level could tell me how much we lose in tax breaks and targeted incentives because no one even knows how many are in the code, how much they cost, or if they are even working!”

The Ellis Plan will:

1. Identify Tax Preferences in Code — Require the Texas Comptroller of Public of Accounts to identify all state and local tax preferences in the Tax Code.
2. Set Schedule for Review — The Comptroller would set a schedule for all to be reviewed in next twelve years.
3. Review and Study — The Legislative Budget Board would perform reviews of those state and local tax preferences over a twelve-year period.

The Ellis amendment will help determine all of the preferential tax breaks in the Texas law. After all, state agencies are subjected to a “sunset review” every twelve years to determine if their functions need to be continued. The tax code would benefit from a similar periodic review of all its exemptions, exclusions, and special treatments to answer one simple question — are they working?

According to state reports, Texas spends $43 billion annually on these incentives, but with almost no accountability or oversight. To many Texans, these so-called incentives are simply another way to game the system. For instance, Texas gave retailers a tax break of over $200 million in 2010 simply to file their sales tax on time. Do you get a break for filing your taxes on time? There’s even a loophole that allows private country clubs to skip out on millions of dollars of property taxes. Using the loophole, the state’s largest beneficiary, River Oaks Country Club, has a market value of $79 million but is assessed at only $4 million. The 2014-15 budget even includes nearly $40 million to subsidize Hollywood movies.

The truth is, as a result of the sunset process, the legislature knows virtually everything there is to know about every penny spent by agencies such as Texas Board of Architectural Examiners, The Texas Commission on the Arts and the Windham School District with the Texas Department of Criminal Justice than we do about the Texas tax code. Furthermore, this session there are nearly 100 bills on the cusp of becoming law which mandate thorough studies of such issues as the prohibition of dairy farming in certain areas of the state, or requiring research papers to be available to the public.

Under the Ellis Plan, Texas will now do the same thing for the tax code.

“We need better accountability measures, checks, and balances on corporate welfare and tax giveaways just like every other government program to prevent wasteful spending in these tough economic times,” said Ellis. “Now we are going to have it.”

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Ellis: Legislation would review all preferential state tax breaks

What if every time you looked at your bank statement hundreds – or even thousands – of dollars were mysteriously missing and you had no idea where the money had gone? I think most Texans would want to get to the bottom of the issue. So why does state government allow this to happen with millions – even billions – of dollars every session? Continue Reading »

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