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Texas Agriculture Archive

March 3, 2006

Special session coming
soon on school finance

By Bobby Horecka
Field Editor

Lawmakers will be heading back to Austin soon as they try to come up with solutions to the school finance problem in the Lone Star State.

Speaking before members of the Texas Farm Bureau Leadership Conference held in San Antonio on Jan. 31, Texas Attorney General Greg Abbott targeted April 3 as the likely start date for the next legislative special session.

And state lawmakers will definitely have their work cut out for them, Abbott said.

The Texas Supreme Court last year ruled the current finance system used to fund schools unconstitutional after deciding it too closely resembled a statewide income tax. They then set a deadline of June 1 for lawmakers to come up with a solution.The courts examined a variety of aspects when determining the constitutionality of the school finance system. Among them were the system's adequacy, its efficiency and its method of taxing the public.

When it came to adequacy and efficiency, Abbott said the state found no problem, constitutionally. There is enough money available to fund the system in place, and it is being spread fairly equally across the state, by definition of the law. The problem involved the taxing system itself.

Abbott explained that the difference between the floor (the lowest amount a school needs to fund its operations and still meet state requirements) and the ceiling (the state-imposed tax cap of $1.50 per $100 valuation) had grown so small across Texas, the court ruled school taxes were in effect serving as a statewide tax, something the constitution doesn't allow.

"The courts said the real issue comes down to whether schools at the local level have a meaningful discretion with regard to assessing taxes and how money is spent," Abbott said. "Their ruling indicates they don't."

The immediate solution comes in the form of simply legalizing statewide property taxes, Abbott said, though he quickly added that was unlikely because few would back such an agenda when it came to the required statewide election.

Lawmakers could also do away with taxes altogether, but that would likely cause major problems when it came to adequacy and efficiency of education and other state-funded programs.

Another solution would be to raise the ceiling—upping the current tax cap from $1.50 per valuation to $1.65 or more. That, too, was highly unlikely, Abbott said, given the fact so many lawmakers have gone to Austin pledging to lower property taxes.

A fourth equally unlikely solution comes in lowering expectations of the schools, which in effect will decrease the amount of money needed to fund a district. "But stepping backward instead of forward when it comes to educating our children is something no one anywhere wants to see happen," Abbott said.

So legislators are left with either revamping the school finance system entirely, which the attorney general said would take far longer than a 30-day special session would allow, or attempting to buy down the floor by seeking other funding mechanisms around the state.

The latter will be the most likely course of action, Abbott said.

"Of course, that will still leave us in need of about $1.5 to $2 billion in additional revenue that the state will have to find in order to allow for that meaningful discretion the schools need to avoid the current problem we're facing," Abbott said. "And if lawmakers wish to allow for the tax cuts that have been so talked about, they'll need to come up with even more.

"Basically, it will serve as a short- term fix until we can make more meaningful changes to school finance in the 2007 legislative session."

Lawmaker also face a hurdle in timing. Abbott said he felt doubtful the issue would be resolved in a single special session, so any changes enacted would seriously push the June 1 deadline, particularly if constitutional amendments are required.