- The Washington Times - Monday, April 24, 2006

DALLAS — A tax plan allowing the state to collect back franchise taxes from businesses is scheduled to come up this week in a special legislative session in Austin — but it may be scuttled before it encounters debate.

The new plan, which Gov. Rick Perry, a Republican, supports as a way to cut state property taxes and raise money to improve the school system, has been questioned strongly by Carole Keeton Strayhorn, the state comptroller.

Mrs. Strayhorn, who shed her Republican roots to run against Mr. Perry for governor in November as an independent, said parts of the Perry plan might be unconstitutional. She asked for an opinion from state Attorney General Greg Abbott.

“I am waving a red flag,” she said yesterday in Austin. “I believe Gov. Perry’s margins tax is an income tax.”

An income tax in Texas cannot be levied unless voters approve. The first time it could be presented to voters would be in November.

The Strayhorn objections carry no legal weight, but she — as comptroller and watchdog of state finances — could declare that the new legislation would put the state’s budget out of balance and thus make the tax plan invalid.

“We’re closer to passing this bill than we’ve ever been before,” said Perry spokesman Robert Black. “She’s going to do everything to stop that from happening.”

If the Legislature assesses a new business tax plan and taxpayers are given some relief from one of the highest property tax levies in the nation, it would give Mr. Perry a boost toward re-election later this year.

But many perils remain before the legislative body leaves Austin next month.

The Perry plan provides no additional money for schools, although the governor has said he would consider adding additional educational items once the Legislature has crossed its first big hurdle.

The state Supreme Court ruled several months ago that the present manner of raising money to operate the state’s school systems is unconstitutional. It said a proper method of funding must be in place by June 1.

Mr. Perry’s plan, closely aligned with one approved last week by the House Ways and Means Committee, deals only with coming into compliance with what the state Supreme Court has demanded.

It is not known what decision the state attorney general will arrive at on the Strayhorn warning, but as the Legislature meets this week, several other items wait tenuously in the wings.

One such item is how much the state will increase teachers’ salaries and how much more per student Texas is going to ante up to improve a system that ranks nationally near the bottom in per-student spending.

Urged by a recent announcement that Texas has a budget surplus of $8.2 billion, more than a dozen education groups called for the state to increase school spending. Texas State Teachers Association President Donna Haschke said pay raises of less than $3,000 would not be “respectable.”

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