Interesting play in Senate Finance this morning: The committee approved Sen. Juan Hinojosa’s bill which changes the method of taxing smokeless tobacco to a weight-based system. The new method raises $105 million biennially, which will fund a program paying off student loans for doctors who work in under-served areas. Next up was Sen. Dan Patrick’s franchise bill expanding exemptions up to $1 million at a cost to the state of $170 million a year. A new version of Patrick’s bill makes its passage contingent upon the smokeless tobacco bill’s passage. It also specifies that any money not spent on the doctor program will be directed to pay for the exemption. If there’s not enough money to fully fund the tax cut, the exemption will drop to $600,000. Current law already directs some tobacco tax money to the state’s property tax relief fund.
Hinojosa says he doesn’t mind the franchise tax exemption piggy-backing his bill, as the bill fully funds the doctor’s loan program. “Once you use the money for loan repayments, the balance will be used for tax cuts,” he said.”They cannot shortchange the doctors.”
The doctors are obviously the winners here, as passage of the smokeless tobacco/student loan repayment bill was uncertain. Now that its fate has been linked to a tax cut, it’s hard to imagine it will be defeated.