Time to change the headlines

Although it still is unclear if he will get any support from the governor who portrays the state’s financial crisis as a mere hiccup, Senate Finance Chairman Steve Ogden apparently still is looking at some kind of fix to the state’s underperforming business tax.

This is the broaderbased tax, also referred to as the margins tax, enacted in 2006 to replace the old franchise tax and supposedly help pay for the school property tax reductions ordered by the governor and the Legislature that year. But, as we know, the new tax fell short and is a significant reason the state is now about $10 billion short of paying for those property tax cuts during the upcoming budget cycle.

Ogden, RBryan, who also is the Senate’s president pro tempore, was talking on the session’s opening day about correcting problems with the new tax. Unlike Gov. Perry, he also advocates spending part of the $9.4 billion Rainy Day Fund to reduce the need for budget cuts.

Ogden was discussing the business tax again yesterday, this time with Comptroller Susan Combs during Combs’ appearance before the Senate Finance Committee. According to Jason Embry in today’s Austin AmericanStatesman, the two discussed the fact that the broad definition of cost of goods sold was one reason why the margins tax has produced significantly less revenue than projected.

Cost of goods is one factor that lowers a business’ tax liability.

Asked if the cost of goods definition should be changed, Combs replied that that possibility was “a conversation you might want to have.”

Ogden and the Senate can’t do much about squeezing more money from the margins tax or spending any of the Rainy Day Fund without some cooperation from the House and some give from the governor. But it would be refreshing to see some serious debate over the margins tax and the Rainy Day Fund start competing with news of looming teacher layoffs and school closures.

Any effort to raise much new revenue from the business tax, of course, would be greeted with howls of protest from many business people. But they should know better than most people that sound investments in education and health care are essential to a welleducated, healthy work force.

Those investments aren’t going to come from budget cuts – or thin air.

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