Texas HousePasses Tax Reform Measures;
Senate Continues ToDeliberate Options
Friday,April 28, 2006 By Shawn Wade
The Texas House ofRepresentatives wrapped up a busy week voting to approve House Bill 5, the lastpiece of a five-part tax reform plan designed to provide property tax reliefand replace the State's current franchise tax system with a broader-basedbusiness activity tax.
A Texas Supreme Court rulingthat declared the current school finance system unconstitutional and taxpayerscalling for property tax relief are the catalysts for change and prompted theLegislature's third called Special Session to try and deal with the situation.
Altogether the House votedthis week to approve five separate bills (HB1, HB2, HB3, HB4, and HB5) designedto allow Texas school districts to cut property tax rates by a third over thenext few years. The bills also establish a structure to replace the lostfunding with additional revenues generated through a broadened franchise(business activity) tax, increases in cigarette taxes and changes in motorvehicle sales tax provisions.
All funds generated by thesechanges would be deposited in a dedicated fund, separate from the State'sgeneral operating fund that will be used solely for the purpose of funding theState's public schools.
The following are briefdescriptions of the changes made by the House passed legislation:
House Bill 1 – Uses $2.1 billion in state surplus funds to buydown property taxes $0.17 in the first year.
House Bill 2 – Dedicates all the revenue raised in the bills toschool district property tax relief and creates a Property Tax Relief Fundoutside of the general revenue fund. Revenues generated by changes infranchise, cigarette and sales taxes on used motor vehicles must go into theProperty Tax Relief Fund, which can only be appropriated to cut school propertytax rates.
House Bill 3 – Revises the franchise tax provisions in Texas toensure that each business pays its fair share of education costs. This billwill be the primary source of funds used to buy down property tax rates. Theprimary franchise tax will be lowered from 4.5 percent to 1 percent and anadditional $3.4 billion will be generated annually from businesses, includingthose that currently avoid paying the franchise tax through loopholes. Retailand wholesale firms will pay a 0.5 percent rate.
House Bill 4 – Tightens the language and the requirements for thesale of used motor vehicles to replace documents previously dubbed as the"liar's affidavit" requiring sellers to reveal and pay tax on thetrue sale amount or a minimum of 80 percent of the standard presumptive valueof the vehicle.
House Bill 5 – Increases the tax on the sale of tobacco productsto raise an estimated $678 million in revenue for property tax relief.
All five pieces of the Housepassed plan have been sent to the Texas Senate for further consideration.
Lt. Governor David Dewhursthas noted that the Senate still has questions about the House plan's ability toreduce property taxes as much as promised. Dewhurst has noted that theremaining challenge for the Legislature is how to utilize the remainder of thecurrent budget surplus and how to adjust revenue rates in the tax plan toprovide adequate revenues.
He pointed out that the taxchanges approved by the House only pay for 33-35 cents of the promised propertytax relief and that he is concerned about relying too heavily on budget surplusfunds to pay for the remainder of property tax cuts.
The Senate will work throughthe weekend to review the House legislation and to consider other ways to fundpublic education and cut property tax rates the week of May 1.
In a statement about theSenate's plan of action Dewhurst said if the Legislature can pass a bill thatreduces property taxes while improving schools, that the state will make a"giant step" forward in the quality of its education.
He added, "If we can pass outthese bills, making the corrections in some case that are necessary . . . andput a bill onto House Bill 1 that pays our teachers more, provides incentives,increases performance and dramatically increases academic and financialaccountability, that's a real win-win for the people of Texas and for thechildren of Texas."
USCIT JudgeDismisses Cotton Research &
Promotion LawsuitFiled In 2003
Friday,April 28, 2006 By Shawn Wade
The CottonResearch and Promotion Program won a significant court victory this week withthe dismissal of a lawsuit filed by a small group of cotton importers.
"The decision ofthe Court to dismiss the claim of the plaintiffs in this case is a testament tothe strong foundation that the Cotton Research and Promotion Program is builtupon," says PCG Executive Vice President Steve Verett. "Since its inception in1966 the cotton research and promotion effort has been a model for others toemulate and continues to be an effective, responsive tool for producers andimporters of cotton to build demand and generate new opportunities."
The cotton case,filed in August 2005 in the United States Court of International Trade (USCIT)in New York, was an attempt by the plaintiffs to obtain relief from payingcotton research and promotion assessments on the cotton content of the productsthey import.
The plaintiffsbased their suit on First Amendment grounds claiming the program violates theirfree speech and freedom of association rights.
Primaryresponsibility for defending the program rested with the United StatesDepartment of Agriculture, which has strenuously supported cotton and othercheck-off programs. Cotton industry input was provided through industry groupsdesignated as intervenors in the case.
The USCIT'sdecision to dismiss the suit was welcome news for the cotton industry and wasobviously influenced by the recent U.S. Supreme Court ruling involving the beefcheck-off program.
In the beef casethe U.S. Supreme Court ruled that generic advertising programs are essentiallythe government's own speech and therefore exempt from challenges under theFirst Amendment.
U.S. cottonproducers and U.S. importers of cotton and cotton textile products fund the CottonResearch & Promotion Program. It is administered and governed by the CottonBoard, the fiduciary and oversight arm of the Program, while research andpromotion activities are developed and implemented by Cotton Incorporated.
The Program isdesigned and operated to improve the demand for and profitability of cotton. Asa commodity market development program created by Congress, the Program issubject to regulatory guidance from the United States Department ofAgriculture.
NCCLeadership Program Applicants Sought
Friday,April 28, 2006 By Shawn Wade
The National Cotton Councilis currently seeking applicants for the 2006-07 Cotton Leadership Program.Qualified candidates for the program are encouraged to visit the program's website, http://leadership.cotton.org, to review program criteria and download applicationinformation.
Application forms andrequired materials must be postmarked no later than June 16, 2006. The 2006 NCCLeadership Class will begin sessions in late September. Sessions will be heldapproximately every other month concluding with graduation in August 2007.
The program is an educationalproject of The Cotton Foundation, sponsored through a grant from DuPont CropProtection. Since its inception in 1983, over 200 program alumni have utilizedthe skills and knowledge gained from their participation to represent thecotton industry at state, regional, national and international levels.
Eligible candidates mustderive their primary livelihood from one of the U.S. cotton industry's sevensegments and be between the ages of 27 and 47 on or before July 1, 2006.Participants must also agree to attend all sessions and complete all requiredreports and evaluations in a timely manner.
Through the programparticipants gain a thorough understanding of all industry segments, the issuesthat affect cotton's economic well-being, the legislative process and the roleof the National Cotton Council.
They are also givenopportunities to interact with the cotton industry's most influential leadersand receive specialized training in public speaking, media relations andbusiness etiquette.