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An attempt to rectify a payroll error that resulted in thousands of National Guard troops owing a total of $9.3 million in federal taxes has failed to meet critical legislative deadlines in Texas. The error occurred when these troops were serving on Governor Greg Abbott's border security mission.
Representative Julie Johnson, a Democrat from the Farmers Branch, introduced House Bill 3031, which aimed to establish a grant program to assist approximately 7,400 troops assigned to Operation Lone Star. These troops faced higher tax bills due to a tax withholding error made by the state on their paychecks.
To address this issue, lawmakers had allocated $6 million in the budget for the grant program, contingent on the bill's approval. The intended purpose was to help the troops cover the unexpected taxes resulting from the state's error. On average, the impact on service members amounted to $867.29, although there were nearly 300 cases with unique circumstances not included in that average, according to Johnson.
Unfortunately, HB 3031 did not receive a vote before the Wednesday deadline for action in the Senate. Despite receiving overwhelming approval in the House with only 17 days remaining in the regular session, the bill encountered hurdles when it reached the Senate. It arrived one day before the Senate's Veteran Affairs Committee held its final meeting, and no senator agreed to sponsor the bill in the upper chamber.
Johnson expressed disappointment over the Senate's lack of support, highlighting the importance of rectifying the state's mistake for the soldiers who were deployed on the border. She emphasized that these troops had sacrificed time with their families, and it was disheartening that the Senate did not share the same priorities as the House.
Neither Governor Abbott's office nor the Texas Military Department, responsible for overseeing the National Guard deployment, responded to requests for comment.
Hunter Schuler, a soldier who spearheaded a unionization effort among Guard members, expressed concern about the legislative session concluding without any action. Schuler's family filed for a federal tax extension, hoping that the state would help cover the cost of its mistake.
Schuler emphasized the importance of paying soldiers correctly when their paychecks are issued and stressed that there would not be a more appropriate time to pass this bill. Waiting until the next legislative session would not make sense, considering the urgency of the matter.
The tax issue, first reported by The Texas Tribune and the Military Times in October, originated from a problem with the state's payroll system, which was not adequately configured to process payments for National Guard troops on state duty. In September 2021, Governor Abbott expanded Operation Lone Star, boasting at one point that 10,000 troops were deployed on the mission. The tax withholding issues emerged the following month.
Officials from the Texas Military Department acknowledged that the problem arose when the state transitioned from monthly to semi-monthly payments to align with federal pay periods. However, during the transition, officials only withheld taxes from one of the two paychecks issued each month, leaving the troops unaware that they would owe additional taxes.
The tax problem was one among several challenges faced by the troops during the mission, including delayed or incomplete payments, subpar living conditions, and a surge in suicides linked to the assignment.
Officials stated that they became aware of the tax withholding error in July 2022 and swiftly attempted to address it through official publications, guidance from supervisors, and town hall sessions. They later offered tax classes to help the troops navigate the issue.
However, Johnson's bill represented the first concrete effort by the state to rectify the troops' situation following the tax blunder. The legislation prohibited grant recipients from receiving an amount exceeding the difference between the federal taxes they had already paid and the actual amount they owed.
Johnson introduced the bill after being approached by a constituent directly affected by the error. Despite the bill's failure to advance in the Senate, the issue surrounding the tax error and the financial burden faced by National Guard troops in Texas has garnered attention, sparking discussions about the need for a resolution to support these service members and address the state's responsibility in the matter.