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Lobby Targets Tobacco Payoff
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Lobby Targets Tobacco Payoff

BY John Moritz

AUSTIN--With Texas facing a $9.9 billion budget shortfall, the head of the state's largest business lobby is pushing what he calls a sure-fire way to pay the bills without raising taxes. Sell the future earnings on the state's $17.3 billion settlement with the nation's largest tobacco companies for a lump-sum payment of up to $5 billion, said Bill Hammond, president of the Texas Association of Business. "It's like the cash-option on a winning lotto ticket," said Hammond, whose organization boasts 140,000 Texas employers. "You take a lump sum upfront." But Peggy Venable, director of the equally conservative Texas Citizens for a Sound Economy, calls Hammond's suggestion a smoke screen. "This is not the time for smoke-and-mirror gimmicks," Venable said. "This is the time for lawmakers to get serious about making the budget cuts we need to put the state back in the business of providing the core services and look for ways to keep paying for programs that might need to be re-evaluated." State leaders are scrambling for ways to bridge the massive deficit for the two-year budget cycle that begins Sept. 1. The state's Republican leaders -- Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick -- have handed down the message that they would not support any new taxes. But they have also said that they plan to protect what they call the state's core services. Dewhurst, who presides over the Texas Senate, acknowledged last week that lawmakers are going to have to find what he calls nontax revenue sources to avoid deep and painful cuts in social programs. Texas' 1998 settlement with Big Tobacco calls for the companies to make annual payments to the state of about $500 million. The exact number depends on a variety of factors, including the rate of tobacco consumption in the state. Hammond's organization estimates that the state could bring in as much as $5 billion by selling the future tobacco earnings. Dewhurst said that lawmakers ought to take a close look at the idea. "That could be a possibility," Dewhurst told reporters recently. "I don't want to get out front and prejudge where [lawmakers] might end up. But in the numbers I have looked at [to balance the budget], that has been included." Several states, including California, New Jersey and Washington, have sold at least a portion of their tobacco settlements. Wisconsin has sold its $5.9 billion settlement for $1.3 billion to alleviate a severe cash crunch. Texas lawmakers used the initial installments to establish a variety of endowments for health-related projects and to combat youth smoking. But the lion's share of the tobacco money has been earmarked for the Children's Health Insurance Program, which provides health coverage for children in low-income working families. Joel Spivak, spokesman for the Campaign for Tobacco-Free Kids, said that selling the settlement's future earnings would undermine those programs. And he rejected the comparison to a lump-sum lottery payout, noting that someone who claims the million-doller prize is set for life, while $5 billion would barely pay the state's bills for a month. "We take a very dim view of it," Spivak said. "You take a short-term gain, for what? Pennies on the dollar. And once that money's gone, it ain't coming back." Hammond said that if the Legislature chooses to raise taxes instead of selling the tobacco settlement, Texans will always be on the hook. "Economic downturns are temporary," he said. "Tax increases are forever." Hammond argued that the state could sell just a portion of the future earnings, or it could invest some of the proceeds in a trust fund. "You don't have to spend it all," he said. "You could spend some and put the rest into an endowment. The earnings from the endowment could be used in future years. "The upside is, you get the state out of the business of betting on tobacco consumption." ONLINE: Campaign for Tobacco-Free Kids, www.tobaccofreekids.com Texas Association of Business, www.txbiz.org Citizens for a Sound Economy, www.cse.org

03/16/2003
Now Pennsylvania Legislators Want to Tax Food and Clothing?!
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Press Release

Now Pennsylvania Legislators Want to Tax Food and Clothing?!

In recent attempts to solve Pennsylvania’s budget woes, a few legislators, known as the “Commonwealth Caucus” have introduced a plan to slightly decrease the state’s sales tax rate while broadening its span over basic goods and services that are currently exempt. The plan wants to lower the sales tax from 6% to 4% but at the same time impose the tax on food, clothing and professional services.

03/15/2003
Dallas Officials Lobby Legislators for Convention Center Hotel
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Dallas Officials Lobby Legislators for Convention Center Hotel

BY Colleen McCain Nelson

Mar. 13-AUSTIN, Texas-Dallas' political heavyweights descended on the Capitol on Wednesday, seeking support for legislation that would fund a convention center hotel. Mayor Laura Miller, seven City Council members and other local officials told members of the House Economic Development Committee that building a hotel adjacent to the newly expanded convention center is the key to making Dallas a destination for conventioneers. "The question remains: If we build it, will they come?" Rep. Steve Wolens told the committee.

03/13/2003
Legislation of interest to Texas CSE members
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Press Release

Legislation of interest to Texas CSE members

TAX & BUDGET ISSUES

03/13/2003
Medical Malpractice Reform: The Time is Now
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Press Release

Medical Malpractice Reform: The Time is Now

Dear Legislator:

03/13/2003
Governor Vilsack Abandons Tax Relief
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Press Release

Governor Vilsack Abandons Tax Relief

Iowa appears to have missed the chance for positive tax reform, and instead taxpayers are getting socked with a bill for new spending. The state legislature reportedly worked out a compromise with Governor Vilsack during a special session focused on economic growth. The deal included tax reduction and simplification, saving taxpayers $310 million a year, as well as new rules to protect reduce frivolous workers’ compensation lawsuits. The measures would have reduced Iowa’s complicated tax code from nine brackets to three, making the state more competitive and business-friendly.

03/13/2003
Buckeye Institute to Release Comprehensive Medicaid Reform Proposal
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Press Release

Buckeye Institute to Release Comprehensive Medicaid Reform Proposal

The Buckeye Institute will release Reforming Medicaid in Ohio: A Framework for Using Consumer Choice and Competition to Spur Improved Outcomes. Medicaid has been one of the fastest growing portions of the state budget in the past decade. Reforming Medicaid in Ohio: A Framework for Using Consumer Choice and Competition to Spur Improved Outcomes examines how policymakers can see significant cost savings and improved outcomes through increased consumer choice and competition. Available at www.buckeyeinstitute.org on 3/13/03.

03/13/2003
Buckeye Institute to Release Comprehensive Medicaid Reform Proposal
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Press Release

Buckeye Institute to Release Comprehensive Medicaid Reform Proposal

The Buckeye Institute will release Reforming Medicaid in Ohio: A Framework for Using Consumer Choice and Competition to Spur Improved Outcomes. Medicaid has been one of the fastest growing portions of the state budget in the past decade. Reforming Medicaid in Ohio: A Framework for Using Consumer Choice and Competition to Spur Improved Outcomes examines how policymakers can see significant cost savings and improved outcomes through increased consumer choice and competition. Available at www.buckeyeinstitute.org on 3/13/03.

03/13/2003
Officials Lobby for Hotel Measure
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Officials Lobby for Hotel Measure

BY Colleen McCain Nelson

AUSTIN - Dallas' political heavyweights descended on the Capitol on Wednesday, seeking support for legislation that would fund a convention center hotel. Mayor Laura Miller, seven City Council members and other local officials told members of the House Economic Development Committee that building a hotel adjacent to the newly expanded convention center is the key to making Dallas a destination for conventioneers. "The question remains: If we build it, will they come?" Rep. Steve Wolens told the committee. Groups that don't give Dallas a second look could be coaxed to come to North Texas if the convention center had an adjoining hotel, the Dallas Democrat said. And spillover from large conventions would benefit other downtown hotels, he said. The committee is considering a bill that would allow the city to build a hotel and use the new occupancy taxes to finance construction. City officials have discussed building a $ 265 million hotel and hiring a private company to manage it. Opponents argued that the project would be a bad deal for taxpayers and that the city should stay out of the hotel business. The project would siphon travelers from existing hotels, they said. After hearing four hours of testimony, the committee took no action on the legislation. Mr. Wolens, who wrote the hotel bill, and his wife, Ms. Miller, who testified in support of the legislation, provided the city's one-two punch at the hearing. Officials from Fort Worth, San Antonio and Houston, as well as Hilton and Marriott executives, also lobbied for the bill. Houston officials successfully sought similar legislation a decade ago. The city's new hotel is scheduled to open in November. Mr. Wolens' legislation would have permitted only Dallas to use occupancy taxes to pay for a convention hotel. But a substitute bill would include any city with a population of at least 250,000. Jordy Tollett, president and CEO of the Greater Houston Convention and Visitors Bureau, said the hotel has given the city a leg up in luring conventions. Fourteen groups signed on with Houston the day the city broke ground for the hotel, he said. A convention center hotel has become a necessity for a number of organizations, said Greg Elam, senior vice president of the Dallas Convention & Visitors Bureau. At least 60 groups won't even consider coming to Dallas simply because conventioneers must trek from the center to hotels scattered across downtown, he said. "This is the most important single step we can take for the viability of Dallas for some conventions," Mr. Elam said. But some committee members questioned whether Dallas would really be on equal footing with cities such as Las Vegas and New Orleans by virtue of having a hotel. "I'm wondering what other attractions besides the hotel are going to be able to bring people to Dallas," said Rep. Martha Wong, R-Houston. That's a familiar refrain in Dallas, Ms. Miller said after the hearing. "We understand that we've got to provide more things for people to do in Dallas," she said. The planned Trinity River project is evidence that city leaders are thinking big, Ms. Miller said. Opponents of the hotel bill argued that it's bad business to build a hotel on the backs of taxpayers. If a convention center hotel were likely to make money, "for-profit hotel chains would be beating down the doors at City Hall," said Peggy Venable, director of Texas Citizens for a Sound Economy. She said the state should not submit to pressure to keep pace with other cities' tax-subsidized projects. "If Las Vegas builds the Taj Mahal, do we have to do the same to compete?" she said. Bruce Walker, president of Source Strategies Inc., presented lawmakers a study that he said shows definitively that convention center hotels do not attract more travelers. "Convention center hotels do not create their own demand," he said In Dallas, there's no evidence of need for additional hotel rooms, Mr. Walker said. "A new hotel is going to steal from other hotels," he said. Mr. Walker, who has also worked for Holiday Inn, studied 16 large Texas hotels. Proponents of the bill disputed his findings because he examined hotels that were simply near - and not necessarily adjacent to - convention centers. Hotels attached to convention centers have been more successful than those even a block or two away, they said.

03/13/2003
House Panel Underwhelmed by Metroplex Hotels Proposal
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House Panel Underwhelmed by Metroplex Hotels Proposal

BY John Kirsch

AUSTIN--A plan pushed by Dallas and Fort Worth officials to use hotel-motel tax revenues to build convention center hotels got a skeptical reception Wednesday from a state House panel. "This, to me, appears to be corporate welfare," state Rep. Senfronia Thompson, D-Houston, told Dallas Mayor Laura Miller. Miller and seven Dallas City Council members appeared before the House Economic Development Committee on Wednesday morning to promote House Bill 262. The measure is sponsored by Miller's husband, state Rep. Steve Wolens, D-Dallas. It would permit Dallas and other Texas cities, including Fort Worth, to use some hotel-motel tax revenues to build convention center hotels. The tax revenue would normally go to the state. Miller said the bill would allow Dallas to compete more successfully for lucrative conventions being lost to Las Vegas and other cities that have more hotels. She said Dallas must offer subsidies to lure development downtown. "Nationally, it has been shown that convention center hotels that are attached to convention centers have to receive tax subsidies, or else they don't get built," she said. Fort Worth City Councilwoman Becky Haskin said that Houston already qualifies for the option, and that allowing smaller cities to take advantage of it would bring more conventions to Texas. Fort Worth had planned to issue $160 million in debt through certificates of obligation to build a 600-room hotel. That plan was derailed when a taxpayers group forced the issue to a public vote by presenting the City Council with a petition signed by more than 15,000 residents. The council has postponed a vote while a committee determines whether a publicly financed hotel is needed. A study released by an Austin-based watchdog group concluded that a tax-subsidized hotel in Dallas would not increase demand for hotel rooms and would drain business from existing hotels. "Though well-intentioned, these projects are not a good deal," said Peggy Venable, director of Texas Citizens for a Sound Economy, which commissioned the study. But Thomas Hazinski, managing director of HVS International, a Chicago-based hotel industry consulting firm, said the study was flawed. He said his firm's analysis of the Dallas project found that it would bring in 12 new events annually and pump $300 million into the local economy. "It really is the opposite of corporate welfare," he said.

03/13/2003

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