Published date: April 7, 2025
Week 13 Report
The Legislature finished week 12, passed another policy committee cutoff, and moved awkwardly into the budget phase of the session. Both chambers passed their versions of the operating, transportation, and capital budgets. Both chambers held hearings on the revenues upon which those budgets are built. And then the Governor held a press conference.
On April 1st, Governor Ferguson stated, “We cannot adopt a budget with anywhere near the level of taxes in the House and Senate plans.” He called on legislators to “immediately move budget discussions in a different direction.” Specifically, Governor Ferguson stated that he will not sign any spending plan based on the intangibles tax, which he deems susceptible to immediate legal challenge.
The House budget relies on a version of the intangibles tax, also known as a wealth tax, that would generate approximately $2 billion per year, providing around $2.4 billion in the two-year House budget. The Senate version of the tax would provide about $4.2 billion in their budget proposal. This “wealth” tax proposal is the largest revenue generator for both operating budget proposals; without it, their budgets do not work.
Particularly in the Senate, this impacts the other budgets. The Senate transportation budget assumes the passage of SB 5802, which dedicates 0.3 percent of the state sales and use tax to the Multimodal Transportation Account. That bill passed from the Senate Transportation Committee this week and was referred to the Senate Ways & Means Committee. The Senate transportation budget also assumes that the Court ordered fish passage costs be fully transferred to the capital budget, which would pay for that obligation with bond proceeds generated by SB 5804, which redirects revenue sources currently directed to the Public Works Assistance Account (PWAA) to the state general fund, and authorizes the issuance of bonds totaling $5 billion paid for by directing a portion of light and power utilities tax that had funded the PWAA. The budget proposals are all interconnected.
With the fiscal committee cutoff next Tuesday, April 8th, and the floor debate deadline on April 16th, the budget negotiators do not have much time to adjust their revenue assumptions and still reach an agreement by April 27th, the last day allowed for the regular session under the state constitution.