Gov. Rick Perry issued the "call" to the Legislature, outlining (and limiting) what they can do.To consider legislation that provides for school district property tax relief. To consider legislation that provides for modification of the franchise tax. To consider legislation that provides for modification of the motor vehicle sales and use tax. To consider legislation that provides for modification of the tax on tobacco products. To consider legislation that provides for an appropriation to the Texas Education Agency.

Lawmakers looking for a way to cut school property taxes got a gift from Comptroller Carole Keeton Strayhorn on the first day of their special session: They can spend $8.2 billion before they need to raise any taxes.And Strayhorn, who's also running for governor (not that THAT has anything to do with it), says the state could raise up to $7.7 billion more for education and other state programs with a combination of relative small taxes, video lotteries at race tracks and reinstatement of a government efficiency program in her office. Gov. Rick Perry wants lawmakers to approve a new $5.9 billion tax on businesses that would replace the current corporate franchise tax and generate $4 billion or so in new money. That new money would be used to cut local school property taxes by up to 50 cents over the next two years. The gross receipts tax worked up by a 24-member commission -- headed by former comptroller and Perry rival John Sharp -- has survived in the open field for two weeks without a fatal blow. That's some sort of a record for a tax bill, and some businesses have gone past neutrality on the thing and said they'll actively support it. Lawmakers have held their cards close, however, and Strayhorn's announcement could undermine the chances for the tax bill; with all that money laying around, it'll be more difficult to get lawmakers to take the risk of voting on new taxes. They're in a position to deliver the goodies -- a local property tax cut and an escape from the courts on school finance -- without the perils of a tax hike on business. That was enough of a problem a week ago, when the budget surplus was -- officially, anyhow -- only $4.3 billion. Strayhorn, citing growth in the economy, a boom in taxable sales and in taxable energy prices, added $3.9 billion to that number. You can get a copy of her revenue estimate on the comptroller's website (www.window.state.tx.us), but the short version is that she added $1.7 billion to her estimate for sales tax revenues, $719 million to her estimate on franchise taxes, and $2.5 billion to what she thinks will come into state coffers as a result of high oil and gas prices, and the taxes based on them. Strayhorn didn't come out and say lawmakers ought to use the surplus on school finance -- she listed some suggestions she says would raise $7.7 billion every two years. But she said they don't need a new business tax like the one the governor is proposing. She'd use some of it, but would increase the amount going into the state's rainy day fund, to $2.4 billion. Using all of the surplus, she said, would set the table for a "massive tax increase" later. She agreed with Perry and some others that lowering local school property taxes would keep the courts at bay in the short term, but she revisited her call for a $4,000 across-the-board pay raise for teachers, part of a $1.7 billion annual increase in spending she would add to the state's education budget. She continued her assault -- begun last week -- on Perry's business tax. She says it runs up a deficit, since it relies on the budget surplus in the first year and then correct that imbalance in later years when there might or might not be extra money (Sharp contends growth in the state economy will fill the gap).

The comptroller and the governor disagree on how to pay for cuts in local school property taxes in the years to come. He'd do it with a new business tax, an increase in the tax on smokes, and by using some of the state surplus. Comptroller Carole Keeton Strayhorn would do it with efficient government, legalized slot machines, smoke taxes and revisions to the existing business tax. Neither included any changes to state sales taxes in their plans.His has been out for weeks; Strayhorn's list looks like this: • Strayhorn said budgeteers could get $3 billion if they'd reinstate the e-Texas program (it was previously called the Texas Performance Review). That's like leaving a baby on the doorstep for the next comptroller. Strayhorn leaves office at the end of this year either to become governor or a retiree and her successor would be in the position of actually coming up with those dollars. It's possible, but it's not exactly ready to be counted. • She reiterated her call for video lottery terminals at racetracks, where "voters have already approved gambling," saying that would raise at least $2 billion every two years. • Perry and Strayhorn agree on a $1-per-pack increase in cigarette taxes, but not on how to use the money. He'd apply it to tax relief; she wants the $1.4 billion to go to the health programs, including the Children's Health Insurance Program, or CHIP. • Instead of a new business tax, Strayhorn wants to keep the current corporate franchise tax, closing loopholes that allow businesses to avoid $1 billion in taxes every two years (several independent number-crunchers have said her numbers are conservative, and that closing the so-called Delaware Sub and the Geoffrey's loopholes would bring in much more than that). • She included a swipe at Perry, saying the state ought to save the $300 million now going into two funds used by the governor to spur economic development.

House Speaker Tom Craddick says you'll see tax bills on the floor of the House as early as Saturday, and is telling reporters that the House will start its business with a tax cut funded solely by the state's huge budget surplus. He also says he'll support Perry's tax proposal.The first bill on the floor would -- as it's written -- lower school property taxes by 17 cents, funded with the budget surplus. That's the idea that's been touted for weeks by Rep. Warren Chisum, R-Pampa. He says his bill would lower taxes enough to satisfy the courts, while spending just little enough -- about $2.37 billion -- to avoid hitting a cap on growth in state spending. And when that's done, he says he'd vote for the Perry plan. Then they'll come in with a handful of single-shot tax bills, each of them addressing a piece of the tax proposal forwarded by Gov. Rick Perry and his Texas Tax Reform Commission. One would raise cigarette taxes by $1 per pack. Another requires people selling and buying used cars to use blue-book values for tax purposes, replacing something now known as the "liar's affidavit," where they simply sign a form noting the price. A third would replace the current corporate franchise tax with a new tax on adjusted gross receipts. Perry didn't include anything but school finance in the official agenda for the legislative session, but Craddick and Lt. Gov. David Dewhurst have been meeting to work on an education reform bill that includes, he says, the reforms the two houses had in common. Putting the taxes in single-shot bills limits what can happen to them once they're in the Senate. A tax bill with three taxes in it is classified as a general tax bill, and it can be amended with any other tax -- even one not included in the original bill. The senate could take a bill like that and send back a completely different tax bill and still be operating within the rules. But a bill with only one tax included is only open to that one tax. The Senate could change the rate or any other aspect of it, but they wouldn't be able to jump in with another levy.

What to do with the money, and is this legal?
? The Texas Public Policy Foundation jumped at the news, saying lawmakers should shun any new taxes, using the surplus instead to lower school taxes by 35 cents for two years. • Gov. Rick Perry, through a spokesperson, said additional money from the suddenly bigger surplus ought to be used to pay for additional property tax relief, on top of the cuts funded by the new business tax. They didn't say how much more, and they're not ruling out other things on the education front if the session goes the way they'd like. • Whatever you call that tax cooked up by Perry's tax reformers, it's constitutional, according to the attorney general's staff. In a letter to Perry's chief of staff, First Assistant Attorney General Barry McBee (Perry's former chief of staff), says the proposed tax isn't an income tax. In particular, he writes, it's not a tax on the income of the people in partnerships. Instead, it's a tax on the partnership, which is legal. Taxing the individuals wouldn't be copacetic under what's known as the Bullock Amendment to the state constitution.