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Perry unsure how tax-cut bid would affect state budget

BY Peggy Fikac
by Peggy Fikac on 4/12/01.

BODY: AUSTIN - As taxpayers face their annual federal day of reckoning, Gov. Rick Perry trumpeted President Bush's tax-cut plan but said Wednesday he hadn't analyzed how it might affect the state budget.

State lawmakers are struggling to fund competing demands in areas including health care.

Bush's tax plan includes a repeal of the tax on inherited property. It has been estimated that if fully implemented, it could cost the state $300 million annually, because Texas has a levy linked to the federal tax.

At a Capitol news conference featuring taxpayers, Citizens for a Sound
Economy and a GOP lawmaker touting a resolution of support for Bush's tax-cut plan, Perry reiterated his support for repealing the estate tax and said Texans would be better off paying less in federal taxes.

Asked whether he had analyzed the effect that federal tax changes might have on the state budget, Perry said no.

"Obviously, it's in a state of flux. The idea that we're going to sit and analyze it down to the penny right now I think is a little bit premature," he said.

Asked about the possible $300 million cost, Perry said: "I think you have to balance like we do every budget cycle. We prioritize. In the state of Texas, we 've got about a $5 billion budget surplus right now. I don't put us in a budget crisis by any sense of the imagination."

Perry's office several hours later issued a written clarification stating that current proposals would phase out the tax over a 10-year period and there would be no loss to Texas in the current two-year budget period.

Senate Finance Committee Chairman Rodney Ellis, D-Houston, said: "I wouldn't say there's a budget crisis, but there's certainly a budget crunch here."

Ellis said he personally favors repealing the estate tax or raising the cap at which property is taxed.

But, he said: "From the state's vantage point, I want all of the resources that we're able to muster to try and help us solve problems along our border, in our inner cities.

"My preference would be more police officers, more funding in education, more funding in health and human services programs coming from the federal level to the state level as opposed to tax cuts."

GRAPHIC: DEBORAH CANNON/ASSOCIATED PRESS : Gov. Rick Perry urged Congress to pass President Bush's tax-cut proposal.