|
|
|
|
|
Will special session fix school finance?
Governor Perry predicted at the end of the legislative session in May that legislators would have a hot summer. He believed legislators would be pressured by their constituents to come back to Austin and fix public school finance. As the special session that began on June 21 progresses, we will see if he is right.
The main point of contention continues to be how to structure a broad-based business tax to generate revenue for reducing property taxes. The Texas House believed they had the right mix on business taxes, but Comptroller Strayhorn indicated their tax plan was almost $4 billion short. The Texas Senate passed a plan that included a gross receipts tax on business. This tax was universally opposed by business, and would be onerous to agriculture producers.
Many Texans continue to ask about using the state sales tax as the main component to reduce property taxes. The legislature has been reluctant to rely on a significant increase in the state sales tax due to fears that Texans will avoid the tax by purchasing goods in neighboring states with a lower sales tax rate. This issue has put the pressure for raising significant tax revenue onto a new business tax.
Some are questioning whether it is realistic to expect the legislature to achieve significant property tax reduction. The original goal was to lower the rate by half from $1.50/ $100 to 75 cents/$100 valuation. During the regular session this year, the amount of reduction had decreased by 25 cents to $1/$100. Now, a plan is being discussed that will provide a 25 cent reduction to $1.25/$100. The question is, "How much of a property tax reduction must the legislature pass to satisfy Texans?"
Lost in this issue of lowering property taxes is providing adequate funding for public schools.
The current lawsuit to be considered by the Texas Supreme Court on July 6 is about more than property taxes. The lawsuit centers on whether the current system provides an adequate and equitable education for Texas children. The schools claim they need an additional $2-$3 billion dollars. If the court agrees, the legislature must find additional revenue for schools, not just create a plan that shifts the current tax burden from property taxes.
All eyes will be on Austin until the end of this first special session. At its conclusion, Texans will see either a new school finance system, a dead-locked legislature back in a second special session, or a break in the action as everyone waits for the ruling by the Texas Supreme Court.
Stay tuned.
