WEEK IN REVIEW
BUSINESS TAX CUTS, SPECIAL ED REFORM PASS SENATE
(AUSTIN) — Businesses that pay the franchise tax in Texas would get a significant break in their annual bill under a measure approved unanimously by the Senate on Wednesday. Part of a package of bills passed by the Senate that includes billions in cuts for residential and business property tax rates, SB 32, by Houston Senator Paul Bettencourt, would allow businesses to write off up to 20 percent of inventory. Texas is one of a handful of states that fully assess property taxes, but the bill would allow them to receive a tax credit for a fifth of the inventory held here in Texas and apply that to their franchise tax bill. This will apply to hundreds of thousands of small business owners in Texas, said Bettencourt. “There are approximately 130,000 franchise tax filers – we think approximately 59 percent – that have a retail or cost-of-goods-sold deduction that may be able to benefit from the inventory tax credit,” he said. This provision is funded by a $500 million appropriation in the Senate version of the state budget. Should claims exceed this amount, the rebate would be pro rated based on the number of applicants divided by the available funds.
The bill also includes a provision to give businesses relief on the tax they pay on business personal property, things that range from production machinery to desktop computers. Instead of the current $2,500 exemption a business owner can claim, the bill would raise that to $25,000. In all, Bettencourt said, small business owners can expect to see $700 million in tax relief under the bill.
Senator Bettencourt also won passage this week on a bill to overhaul the state’s special education system, one that would completely transform the way the state funds public school students with special needs. SB 568 would move from a model in which schools receive extra money based on where a student receives services to one in which the money is based on actual services provided, regardless of location. The current system weights funding amounts based on whether a student receives services in the classroom, at home, in a dedicated special ed classroom, or institution. The new model would weight based on services and the intensity of the services provided across eight tiers that range from simple speech therapy to full residential placement. Bettencourt said this will direct money to where it is needed regardless of where services are provided. “We’re making a transformative step for special education across the state. This is something that 775,000 children in the state could use now,” he said.
The bill also looks to increase access to services by offsetting the cost of initial evaluations for potential special education students, currently borne wholly by local districts, helping to get more kids into services faster and begin interventions as soon as possible. It also increases money for transportation services for special ed students, a significant cost to schools who have to serve students across the district. It would also create a grant program to help instruct and certify teachers in education for students with dyslexia or autism.
The state has come a long way since it was cited by the federal government for insufficient special education access in 2018, said Education K-16 chair and Conroe Senator Brandon Creighton. SB 568, however, seems like the first concrete plan of action instead of temporary fix for Texas special education, he said. “SB 568 feels like the first time we’ve had a real road map to closing some of those funding gaps in a lasting way,” said Creighton. Bettencourt agreed and said that this bill is just the foundation, and expects to make more reforms as schools implement the model between now and when the legislature returns to regular session in 2027.
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