AUSTIN - The Texas House gave final approval Thursday to a measure that would change the way Texans pay for public schools, replacing some property taxes with new consumer and business taxes.
The bill now moves to the Senate, where a committee approved its version of the tax bill late Thursday by a 9-5 vote.
The tax bill, which sharply divided the House, was approved by a 70-69 vote. House officials changed the vote count after it was initially announced, blaming electronic voting machines malfunctions for switched votes. Overall, Democrats and a handful of Republicans opposed the measure.
Each version likely will end up before a panel from each side to try to negotiate a compromise before the July 20 end of the 30-day special session.
Like the House version, the Senate's proposal also would reduce the property taxes Texas homeowners pay and would increase other consumer taxes. Both measures increase the cigarette tax and sales tax, but the Senate version also raises the taxes on alcohol by 20 percent. Both also close loopholes in the business tax that allow thousands of Texas companies to avoid paying state taxes.
The House bill would lower property taxes from $1.50 per $100 of property value to $1.23 per $100 value in 2006 and $1.12 the following year.
The sales tax rate would increase from the current 6.25 percent to 7.25 percent and would be expanded to include bottled water, auto repair, and certain computer goods and services. The bill would increase the cigarette tax by $1 from its current 41 cents per pack. Money from the new taxes would only go to property tax reduction, not to schools.
Republican Gov. Rick Perry said Thursday that the measure was good public policy, but the rate of sales tax increase would probably be altered during negotiations.
"As an across-the-board group, the Democrats did not want to lower property taxes in the state, and I know they have constituencies that are being strangled by these high property taxes," Perry said.
On Thursday, before the final vote, House members also voted to tack a $4 tax onto admissions to nude entertainment shows.
Many Democrats have criticized the property tax relief measure because the only segment of Texas residents who will receive a net tax cut from the measure are those who earn more than $140,000 a year. Middle-income Texans would foot most of the tax increases.
"The middle-class has a lot to say about the future of Texas," said Rep. Pete Gallego, D-Alpine, urging a vote against the bill.
But Republican supporters of the legislation hailed it for what it will do for property owners.The Senate version of the tax bill, which will get debate and a vote from the full chamber on Sunday, would not tax bottled water or auto repairs and would increase the sales tax to 6.75 percent. Low-income Texans who use a Lone Star Card to buy groceries would get a sales tax credit.
Texas voters would decide if they want to expand the state's business tax to include several structures that are not currently taxed, in exchange for more property tax relief, in the Senate's proposal.
