During Budget Crisis, Texas House Committee Passes Tax Break For Yacht Owners

In response to the worst state budget crisis since World War II, the Texas House has proposed slashing $27 billion from the budget, including huge cuts to education, nursing homes, and health care for the poor. Yet last Friday, the Texas House Ways and Means Committee approved a tax break for those who want to buy yachts costing $250,000 or more.

The bill, HB 2187, was proposed by Houston Republican Rep. John Davis, and would cap the sales tax the state could collect on the sale of a personal boat. According to AP, Davis authored the bill out of fear that yacht owners would start buying their boats in Florida, which has a similar law. Davis described it as “economic development,” while Ways and Means Chairman Harvey Hilderbran (R-Kerrville) said it was “one of those things you have to do.”

The bill was originally estimated to cost Texas $1.4 million annually in lost revenue. It will now move on to be considered by the full House, where several top Republicans have expressed confidence it will pass.

Meanwhile, Democrats are expressing outrage that their GOP counterparts would even consider the bill at a time when they are cutting essential state services:

Rep. Mike Villarreal, D-San Antonio, voted against the measure and lambasted it as wrongheaded at a time when cuts are threatened in areas including education and Medicaid reimbursement rates for health care providers

“With all due respect, sometimes I’m not sure what planet my Republican colleagues live on,” Villarreal said in a statement. “How can they say tax breaks for yachts are a higher priority than supporting our children’s classrooms or keeping nursing homes open?”

Texas faces one of the worst budget outlooks in the country, and amazingly, only about a third of it was caused by the economic downturn. The state has had a chronic shortage of revenue after years of slashing property and business taxes and creating numerous tax breaks and exemptions, just like the proposed one for yacht owners. Yet Republicans still insist on not raising taxes, and as a result have had to rely on draconian cuts to balance the budget.

Under the current proposal, $7.8 billion will be cut from Texas public schools, four community colleges will close, 60,000 students will lose college financial aid, as many as 97,000 teachers and school employees will be laid off, 9,300 government jobs will be eliminated, Medicaid will be shortchanged by nearly $14 billion, and health and human services funding will plummet by a quarter. Despite this devastating toll, Republicans have been reluctant to tap in to the state’s $9.4 billion rainy day fund to alleviate the cuts, even though the fund is one of the most flush in the country.