Scattered Applause

Will Governor George W. Bush’s property-tax proposal be a rookie mistake?

Everyone at the Capitol that morning in late January knew George W. Bush was at a high plateau, and they were there expecting to witness history being made. Popular and successful after two years as governor, openly discussed already as a potential candidate for national office, he was, on this cold, clear Tuesday, about to give his second State of the State address. The Capitol was crowded and practically boiling over with activity. The gallery of the House chamber filled until every seat was taken and every spot to stand was occupied.

It was no secret that the governor wanted to reduce property taxes. He had gotten practically everything he’d wanted during the previous session. Now he was asking for something quite different, and the stakes were higher. Lowering the property tax, whose revenues are used to pay for public schools, would transform Texas. He would be changing the method of raising money for education from one that is outmoded and unpopular at best and inadequate and unfair at worst. Those are reasons enough for making the change. But that’s not all. A governor who had successfully lowered taxes would be a governor with a strong record to take before voters, whether just in Texas or in the whole country.

On the other hand, money for schools had to come from somewhere. Any tax cuts in one area would mean new taxes in another. What was Bush going to do? And whatever it was, could he get the Legislature to vote for it? A governor who proposed a tax cut and failed would be just that—someone who had tried and failed.

Years from now, if Bush’s political career continues to advance, this speech would be remembered as an early decisive moment. If his career does not advance, this morning would be remembered, to the degree it was remembered at all, as the first misstep.

The Speaker of the House Pete Laney and Lieutenant Governor Bob Bullock sat near the podium on a platform with other dignitaries. At eleven o’clock, the sergeant at arms proclaimed that the governor was at the door of the House, and the Speaker solemnly announced him. As he walked to the podium, he looked happy, even amused, with a cocksure tilt of his head and a confident smile.

The governor began his speech by saying that he felt different today from when he made his first State of the State speech two years ago. “I’ll admit I was nervous,” he said. “I was the brand-new governor, a rookie in a different ballpark.” But this time, he said, he came knowing he was among friends. Still, there may have been a sign of nerves even this second time around. The governor gave his speech too quickly. For someone who was rolling the dice on his future, he seemed to take no pleasure in the rolling, as if he just wanted to get the bones out there on the table and be done with it.

In the first part of his speech, which was not much commented upon later, he zipped through the accomplishments of the last legislative session—education reforms, tort reform, toughening criminal justice, and welfare reforms. He reemphasized his reading initiative and its goal—which he called “the clearest and most profound goal I have for Texas”—of having every child reading at grade level by the third grade and continue reading at grade level or better throughout elementary and secondary school. He spoke of encouraging adoption, some further strengthening of the juvenile justice code, and laws keeping violent criminals from getting early parole. He said he wanted a long-term water plan and that “there is more to do” on tort reform, but he did not specify what that might be.

He spoke about creating a welfare system that changes behavior but does so in a compassionate way. He specifically mentioned “faith-based groups” and a report named “Faith in Action” that describes “how government can encourage people of faith to help people get off and stay off welfare.” If the proposals he was about to make had not been so dramatic, this would surely have been the most controversial portion of his address. There has been growing support among conservative circles for Christian organizations and programs whose statistics show great success in solving a variety of social problems—getting addicts off drugs, getting people off welfare, and the like. Perhaps they’re right, but every drug and welfare program that has come along looking for public money has flashed impressive statistics, yet drugs and welfare are still with us.

Finally, the governor got to the part of his speech everyone had come to hear. He began by describing why property taxes in Texas are among the highest in the nation. Property tax rates were raised repeatedly during the bust to make up for the revenue that was lost when property values declined. Now property values and tax appraisals are going back up again while the rates are remaining at high levels. Thus, property taxes keep going up and, as the governor said, “are headed through the roof.” He told a few horror stories of people worried that taxes would force them from their homes and of business leaving Texas because of the property tax burden.

Then he described his plan:

The Cuts
•A constitutional amendment increasingthe homestead exemption by $20,000
•A 20-cent cut in the school property taxrate in every district
•Eliminate the corporate franchise tax
•Eliminate the school property tax on business inventory.

The New Taxes
•A 1.25 percent business tax on sales over $500,000, allowing deductions for the cost of goods and the capital invested
•A 1⁄2-cent increase in the sales tax
•A 1⁄2-cent increase in the motor vehicle tax
•An unspecified tax on lawyers and other professionals that are currently not taxed at all.

After describing the plan, Bush repeated his opposition to a personal income tax and finished with a story about schoolchildren in his office who shouted an affirming “I’m going to make it.”

He had just proposed the most sweeping changes in Texas for a generation or more.

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