State loses billions in exemptions

January 21, 2011 7:19:59 PM PST
Business tax breaks cost Texas $4.3 billion in the last state budget, a figure that amounts to about a third of the state's massive revenue shortfall, according to a legislative report obtained Friday by The Associated Press. The report also found that local governments lost $235 billion in state property tax exemptions, including those given for elderly and disabled homeowners, according to the report prepared by the House Ways and Means Committee. A tally for sales tax exemptions -- the state's biggest cash generator -- was not available.

One of the largest carve-outs was for the natural gas tax, which totaled about $1 billion a year in exemptions, according to the report. An exemption for bottled water sales amounted to a loss of about $250 million a year for the state, while an exemption for corporations with business interest in solar energy devices cost the state more than $1 million over the last two years.

Democratic Rep. Rene Oliveira, chairman of the tax-writing committee, said the panel was asked to examine the exemptions to determine "how the current costs and benefits compare with the original legislative objections." The report did not make recommendations about which tax exemptions could be repealed.

Oliveira also did not say which exemptions he would favor for repeal, but said cites as much as $2 billion in "low hanging fruit."

"We should be looking at exemptions that should be repealed -- whether it's a corporate welfare exemption . or whether it's a personal one -- that the public policy that was the basis for it 10, 15, 20, 30 years ago no longer exists," Oliveira told the AP.

The Legislature is struggling to make up for a $15 billion revenue shortfall. But with a new Republican House supermajority that has largely opposed tax increases, initial budget drafts assume no new revenue and propose massive cuts to state services like education and health care for the poor, elderly and disabled.

"Before the election many of those exemptions could be on the table for consideration, now I don't know," Oliveira said. "There were certainly a significant amount of Democrats that would have joined me in the repeal of many of these exemptions, they're not here now.

"With the supermajority of Republicans, they're going to decide if we do any of these."