Tax proposal won't compromise economic growth, he promises.

Lt. Gov. David Dewhurst promises his holiday gift to the Legislature will be a Senate proposal on school finance, one that both cuts taxes and supports economic growth.

Dewhurst addressed the Real Estate Council of Austin luncheon today. RECA asked Dewhurst to talk about the legislative session, and when that talk turned to school finance, Dewhurst said the Senate intends to support some kind of broad-based business tax that provides a 50-cent cut in local property taxes. That backs off of the original proposal to cut property taxes in half.

“We’re looking at a restructuring of the tax code,” said Dewhurst, adding that businesses all want the same thing. “Business owners tell me they want something that’s a low rate, something that everybody pays and something that is fair.”

A restructured business tax to replace the franchise tax is the solution du jour to pay for education, but Gov. Rick Perry’s office says the Big Three still are not on the same page. Spokeswoman Kathy Walt says the key issue continues to be finding a method of tax reform that will not kill economic development in the state.

“What might be more palatable to one segment may have a different impact on another industry,” Walt said. “When you have businesses that are either capital intensive or labor intensive, it gets very difficult to come up with the right tax.”

What some perceive as Perry’s “anti-tax” philosophy is the long-held belief that government services are best paid for through job creation, Walt said. Job creation is the one strategy that provides a long-term revenue solution for the state.

During lunch, Dewhurst also spoke of school funding choices in terms of job creation. Cutting property taxes is the No. 1 economic multiplier in a state economy, Dewhurst said. Cut local property taxes by a third and that revenue could create 454,000 new jobs for the state. It would lead to an estimated $52 billion in additional business investment and $22 billion in additional personal disposable income, Dewhurst said.

Dewhurst said every business leader in Texas must have the same Blackberry message, which is that any strategy the state uses to generate revenue should be fair and should be applied equally across all industries.

Walt does not reveal just what revenue option Perry would prefer, except to say that whatever revenue source that is chosen should be fair, applied equally and not subject to change. Businesses want to be assured of a stable tax system in the state, Walt said. They don’t want to worry that a tax system is subject to frequent legislative increases.

Dewhurst said state lawmakers would go into this session with a $2 billion deficit. That’s far better than the $11.7 billion shortfall it faced two years ago. Dewhurst said he is confident that the state can provide more money for education, as well as Medicaid, CHIP, Adult Protective Services and Child Protective Services.

Dewhurst spoke of additional funding tied to more accountability in order to guarantee Texas students compete on a world-class level. On Medicaid and CHIP, Dewhurst said the costs of services would only continue to multiply and that the state must do a better job of providing incentives to maintain healthy habits and preventative care.