Texas-Style Tax Cut
A commission, with business support, was able to do what the legislature couldn't—change the tax structure in Texas.
By Dave McNeely
April 2007
After years of backing and filling, Texas lawmakers finally cut the state’s over-extended local property tax last year. The Texas Supreme Court made them.
In a spring special session, legislators reduced the school property tax rate by a third, and made up the difference by replacing the outmoded and often-ignored state franchise tax with a broad-based business tax.
Even then, it wasn’t simple. The courts and the Legislature have haggled over the Texas school finance system for years.
After watching the Legislature go through one regular 140-day session, and four special sessions that he called, and still not come up with any solution to the property tax dilemma, Republican Governor Rick Perry did something desperate. He called on John Sharp, the former Democratic state comptroller and his former friend from student days at Texas A&M University, to chair an advisory panel called the Texas Tax Reform Commission.
The reason Sharp is described as a “former friend” is that he and Perry had squared off in the 1998 race for lieutenant governor. Perry, with the enormous help of then-Governor George W. Bush’s re-election coattails, was elected.
What caused Perry to turn to his Democratic rival? Partly desperation. But Perry also realized, after a chance meeting at a skeet shoot where the two re-established their friendship, that Sharp—a legislator for eight years, member of the Texas Railroad Commission for four years, and the state’s tax collector for another eight years—is one of the brightest experts on both tax policy and politics in Texas. The tax problem was tied in such a convoluted knot that it required a Houdini dealmaker—whom business folks and politicians alike respected—to untie it.
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