Office of the Governor Rick Perry

Gov. Rick Perry's Remarks To The TTARA Board Regarding Tax Reform

*Note - Gov. Perry frequently departs from prepared remarks.
Tuesday, April 20, 2004  •  Speech

Thank you for joining me today.  I am here because I need your help.  I have put forward a school finance plan that lowers property taxes, and replaces that lost revenue without a broad business tax, an across-the-board tax hike on the existing base, or an expansion of the sales tax base.

I understand the historical objection among the business community to differing initial property tax rates for employers and residential taxpayers.  That is why I bent over backwards to come up with a concept that hasn’t been tried anywhere else, a concept that ensures employer and residential rates are linked, and go in the same direction, which is down.

Today employers rely on three words in the Texas Constitution to protect them from a tax shift, “equal and uniform.”  These are three words that one day could be challenged in court, and subsequently redefined.  I want to give you stronger constitutional protections, specific wording that talks about protecting the job climate, so that a legislature in 2010 or 2020 will have major obstacles in any effort to reverse course and harm the business climate.

Consider the benefits of the plan I am offering: you can get an ironclad guarantee in the Texas Constitution that rates will be cut in half.  The vast majority of employers, even at a higher rate of a dollar forty, would receive an initial property tax cut.  I propose no job-killing taxing alternatives.

But let’s be very clear about the choice facing every employer in this room, because I don’t want there to be any ambiguity when you walk out of this room:  For the members of this Legislature, this is not a choice between doing something and doing nothing.  This is not 1997 where there was a nice fallback position to cut taxes by $1 billion and just go home.

With so many districts at the cap, with the groundswell for eliminating Robin Hood, and especially for cutting property taxes, this legislature will not leave until they act.  So the choice is not between something and nothing, it’s a choice between my plan, or any one of the alternatives. 

If you do not support my plan, which locks a 50 percent property tax cut into the constitution, I can’t promise you that you will like the alternatives better.  I can’t promise you that this legislature won’t simply raise the homestead exemption again, providing zero property tax relief for employers.  On top of that, I can’t promise you they won’t replace the revenue lost from a property tax cut with a BAT or payroll tax.

Anyone in this room that is nervous about a constitutionally-linked roll ought to break out in hives about a tax on payroll, profits and depreciation. There is no time to waste.  Who’s to say 10 or 20 years from now you will have a legislature that looks as favorably as this one does on job creation and job retention?  What guarantees will you have then that they won’t move to shift more of the tax burden to employers? 

And they don’t need to get the voters to amend the constitution to eliminate those three words, “equal and uniform.”  They could try to get a favorable court decision, or they can just raise the homestead exemption, and continue to allow appraisal creep to drive up your tax burden.

I am offering employers in this state a good deal: in exchange for a smaller tax cut now, we will guarantee in the Constitution a 50 percent reduction, and we will take off the table the alternative of raising the homestead exemption or enacting broad new business taxes.  I am giving you an opportunity to finally limit the growth in your overall property tax bills with a property tax revenue cap.  This is a protection against skyrocketing appraisals that even supersedes an appraisal cap.  If employers do not rally behind this plan, then employers better be ready to live with the alternatives.

I want your support because I believe I have offered the best plan.  It is not a perfect plan, but it is a plan that will ensure future prosperity.  As I said when I started, I need your help.  And I will stay here and answer any question you may have so that there is no confusion when any of us leave this room.

Thank you.

Governor's Initiatives:
Property Tax Relief and Appraisal Reform »
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