Franchise Tax Misses The Target

A leading economists says that the new franchise tax, enacted by the Texas Legislature in Special Session in 2006, is not going to meet its target of $5.9 billion in collections. Via the Chron:

But Dale Craymer, chief economist for the Texas Taxpayers and Research Association who has worked for a comptroller, two governors and the Texas House, said, “I think it’s unlikely we’re going to hit the first-year target of $5.9 billion. It’s too early to say how big a miss it is.”

Still, Craymer said, Texas has billions unspent so even if the new tax is a bit short, “the state still has plenty of money to cover its needs.” He predicted problems would be smoothed over as the tax is in place longer.

Wait a minute…billions unspent? So, we’ve got to tap into the surplus (some of which is already earmarked not to be spent in the coming fiscal year, and some of which is earmarked to be spent on “property tax relief.”

So, to be clear, the Legislature passed a tax reform plan and a property tax “relief” plan that gave no new money to public schools and, in the short-run at least, is going to cost the state more money because it isn’t meeting expectations.

Great.

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