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CONSTITUTION & BYLAWS
LEGAL COUNSEL
ACTIVITY REPORT
(1) Special
Tax Session –
In November, 2005 the Texas Supreme Court upheld a lower court decision
that the state’s school finance system is unconstitutional and gave
lawmakers until June 1, 2006 to fix it. The Court said that the system is
unconstitutional because so many school districts are only allowed to tax
property owners the maximum limit of $1.50 per $100 of assessed property
value, thereby preventing districts from setting their own tax rates. The
Texas Constitution bans statewide property taxes.
To meet the Court’s June
1 deadline, Governor Perry called lawmakers back for another 30-day
Special Session to provide property tax relief and devise a new school
finance plan on April 17, 2006. In order to reduce property taxes and
provide a new source of revenue for schools, Governor Perry proposed a new
tax bill (H.B. 3) which substitutes a gross receipts tax for the current
franchise tax. H.B. 3, which passed the House by a vote of 80 to 69 on
April 24, 2006, replaces the current franchise tax with a new 1% gross
receipts tax. Sole proprietorships and partnerships are exempt from the
tax, as are small businesses with $300,000 or less in total revenue.
During the debate on H.B.
3, TSPS urged Legislators in the House to eliminate the current $200 per
year professional occupation tax and the sales tax on surveying services
as an important piece of any legislation which would impose new business
taxes on the surveying profession. However, our efforts were unsuccessful
because these two proposals were not included as part of the Governor’s
Proclamation calling the Legislature into Special Session, which was
limited to consideration of legislation that provides for property tax
relief, modification of the franchise tax, modification of motor vehicle
and tobacco taxes, and an appropriation to the Texas Education Agency.
As passed by the House,
the new gross receipts tax proposed by Governor Perry had been endorsed by
a number of trade and professional organizations, including the Texas
Association of Business, the Texas Medical Association, the Texas Society
of Professional Engineers, and the Texas Association of Builders.
However, it appeared that the proposed new tax, even after taking into
consideration the House approved 11% reduction in school property taxes (H.B.
1), would substantially increase the amount of state taxes paid by
surveying firms which are incorporated.
Accordingly, on April 25,
2006, TSPS asked the membership via blast email whether or not TSPS should
oppose the new tax because it increases the cost of doing business for
many TSPS members, or should TSPS join the other groups which have
endorsed H.B. 3 because it will reduce property taxes, stimulate real
estate development and economic growth, and provide a long-term stable
source of revenue for schools.
The responses received
from TSPS members were 57% for H.B. 3, 31% against H.B. 3, and 12%
neutral. Based upon these responses regarding the proposed new tax and
related issues, TSPS did not endorse H.B. 3 because it will have an
adverse financial impact upon a substantial number of TSPS members.
However, TSPS supported amendments which made it clear that (1) sales
taxes collected from a third party and remitted to a taxing authority and
(2) subcontracting payments to provide services, labor, or materials in
connection with the design, construction, remodeling, or repair of
improvements on real property or the location of the boundaries of real
property are excluded from the total revenue that is subject to the gross
receipts tax.
As of this date, it
appears that the following legislation will pass during this Special
Session which ends on May 16, 2006:
H.B. 1
– Uses part of the state budget surplus to cut school property taxes by
one-third statewide over two years. Also increases school spending and
teacher pay.
H.B. 2
– Dedicates the new gross receipts tax to property tax relief and
education.
H.B. 3
– Replaces the current franchise tax with a new 1% gross receipts tax.
Sole proprietorships and partnerships are exempt from the tax, as are
small businesses with $300,000 or less in total revenue (HB3
GROSS RECEIPTS TAX FORM).
H.B. 4
– Allows additional property tax relief by ensuring that the sales tax on
used cars are based on at least 80% of market value.
H.B. 5
– Allows additional property tax relief by increasing the sales tax on
cigarettes.
(2) Title
Insurance –
The ratemaking phase of the 2004 Title Insurance Biennial Hearing will be
held in Austin on August 16, 2006 at 9:30 a.m. TSPS was admitted as a
party via Prehearing Order No. 1 dated November 16, 2004. Each party must
file its Statement of Position on or before August 11, 2006. It is
anticipated that the Hearing will last 2-3 days.
Respectfully submitted,
Mark J. Hanna
TSPS Legal Counsel
NOMINATING
The Nominating Committee met in
February to review a preliminary list of candidates for the 2006 election
of Officers and Directors for TSPS.
The Chapters were asked to also
submit names for addition to the preliminary list. I am happy to report
the committee did receive several names from Chapters and we have made
independent selections from the final list.
At the June Board Meeting we
will review the independent selections and be prepared to submit our list
of candidates in August, 2006.
Respectively Submitted,
Henry A. Kuehlem,
Chairman
SOUND & VIDEO
TELLERS
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