HIGHLIGHTS FROM OUR INTERVIEW WITH DICK LAVINE
Q: LONE STAR STANDARD
Tell us more about your organization, Every Texan?
A: DICK LAVINE
Every Texan was actually founded about 40 years ago by the Benedictine Sisters of Boerne, Texas, outside San Antonio. It is a group of Catholic nuns who owned a sort of a nursing home that they sold as they got older. They used the money to fund various good deeds, including starting our organization.
They hired somebody in Austin to try to talk to the legislature about improving health services, which was their main interest. And over time, we've expanded broadly to all health and human services, public and higher education, among other things.
I came on almost 30 years ago to look at the revenue side of things. One of the reasons we feel that Texas does an inadequate job is it doesn't have enough public money and the money it does have, it doesn't raise it in the most fair manner.
Q: LONE STAR STANDARD
Did Texans really receive the largest property tax cut in history?
A: DICK LAVINE
We definitely got a tax cut. Whether it's the biggest in history, or was it inflation adjusted percentage? We never got involved in that debate.
But before we get started, we try to never use the term surplus. To me, surplus means more than you could use. What it really was was an excess cash balance, which is technically how the controller would describe it. And that's because we've been underfunding, we haven't raised the basic allotment, and didn't expand Medicaid. So, the money piled up because we weren't willing to spend it.
But once we had all that money and the question came down to if you're going to do tax cuts, how's the best way to do it? That's when I found myself in agreement with Senator Paul Bettencourt. We are not natural allies, but we both had the same point of view that if you're going to cut taxes, the best way to do it is to raise homestead exemption. And that is in large part what they did."
From our point of view, the reason for raising the homestead exemption is because it's an equal dollar amount of reduction for people regardless of their income level. So, if you have a $300,000 home or a $3 million home. Obviously that savings is worth a whole lot more to somebody with a lower priced home, presumably with a lower income. It's a more fair way to reduce taxes.
Q: LONE STAR STANDARD
What was the Chapter 313 program and how did it end?
A: DICK LAVINE
Chapter 313 was a program instituted around 2000 or 2001 as a school property tax abatement for certain businesses. For example, if you had a wind farm, or a semiconductor plant or a refinery, you would pay property taxes on a lower predetermined value.
So, if you put $100 million into it you might only pay property taxes on $10 million but they were only paying as if it were a 100 million. That's a 99% tax cut.
Chapter 313 was very popular among businesses. There were contracts with local school districts but it was the school district that was giving up the property tax. Now, it didn't cost the school district anything because the school finance system would not penalize them for giving up the value. They were going to get the same amount of money, whether they collected on the new project or not. So they had no reason to say no. And in addition, they would get kickbacks from the property tax.
I worked with Senator Lois Kolkhorst, another person where we had a certain overlap of interests. She was a very trustworthy and competent ally in capping the amount of these kickbacks because they obviously distorted the decision making. We ended up capping it at $100 per student per year for about 13 years for these projects.
The other thing is a lot of these projects, were going to come to Texas anyway. If you're going to build a refinery or liquefied natural gas export terminal, well, the gas comes out of the ground in the Permian Basin, it goes through pipelines in Texas and it comes to the coast. They don't need the tax break. Where else are they going to build it, right?
Same thing with wind. The wind blows all over west Texas and also along the coast. We have these huge potential markets in Houston, Dallas, Austin, and San Antonio. We have our own energy grid. So there's no competition coming from outside. So if you want to have a wind farm, if you want to service those big markets with wind power, you're going to build in Texas, so you don’t need a tax break. You're going to come anyway.
313 had a sunset date in it, which was a very positive thing. We think that most tax breaks should have that. The sunset provision makes the legislature come back and have to look at the program. Is it still doing what you wanted it to do? Is there a better way to do it and a cheaper way to do it? We do that for state agencies through the sunset process as well. When it came time to expire in 2021, Chapter 313 expired.
Dick Lavine is a senior fiscal analyst at Every Texan, an organization that advocates for the better funding and provision of public services. Dick also served on the board of directors at Travis Central Appraisal District for more than 20 years, serving as the Chairman for a majority of his time there.
This interview transcript has been edited for length and clarity.
Listen to the full discussion here: https://texas-talks.simplecast.com/episodes/ep-4-dick-lavine
