As we proceed into a new year, the state legislature faces some major challenges which will affect the citizens and economy of Texas for many years to come. A major issues on the front burner now is education.
Governor Rick Perry, House Speaker Tom Craddick and Lt. Gov. David Dewhurst met recently with others to talk about school finance plans. According to news reports they are in agreement to do away with the so-called "Robin Hood" plan currently used to finance public schools in Texas.
This week Perry reversed his previous opposition to new taxes and announced he would not oppose new taxes if they are required to provide funding for Texas public schools.
I have no doubt there will be a strong effort sometime this year to find a way to fund public schools without relying on local property taxes to pay all the expenses. I expect Perry will call a special session soon after the primary elections are over.
The various ideas that have been suggested include cutting property tax rate limits by 50 percent, or more, and replacing that revenue with new income from increased sales taxes, a separate business property tax, or an employee tax that would be paid for by businesses and not employees.
The state constitution forbids any state property tax, and because more and more school districts are at or near the $1.50 maximum tax rate, the argument has been made that the school property tax has become a de facto statewide property tax. This is because the current plan takes property tax money away from the wealthiest districts and gives it to districts with lower property values. In effect, this means most school districts are at or near the maximum tax rate and some are distributing their excess taxes to equalize school funding.
Under this system property rich school districts send large amounts of taxes to the state to be sent to property poor schools, and they argue that the system is unfair to them. The current system has brought improvements to many poor areas of the state.
This issue is now being tried in court, and the outcome of the case will have a great impact on any proposals that come before the state legislature.
I want to be clear that I do not think you can separate funding for public education and the quality of public education. I believe that we must fight for equal educational opportunity for our children and for every child in Texas.
Part of the debate we now face is an argument over whether Texas should have equity or adequacy as the standard for public school education.
I support the idea of equity. That is, that all students across Texas should have the same educational opportunities regardless of the wealth or poverty of their part of the state.
However, there is a strong push to have adequacy as the standard. This would mean that a certain level of educational opportunity would be determined to be sufficient and required as a minimum from all schools. Wealthy school districts, however, would be allowed to raise extra funds and provide expanded educational classes and opportunities for their students.
Regardless of where parents move in Texas, I want their children to get the same quality of education in their new school as they would get in their old school.
When we talk about poor and wealthy school districts, we are talking about the value of property available for taxation in each school district.
Some school districts have major businesses, industrial parks, and huge shopping centers, as well as gas and oil production, which they can tax.
Other school districts, like many here on the border and in rural parts of Texas, have very low property values and almost no manufacturing, shopping centers or high priced subdivisions so their tax income is much lower.
For example, the taxable value of property in the San Diego Independent School District is $113 million with a tax rate of $1.57. That produces a tax levy of $1.78 million. The school district has 1,530 students, so local property taxes provide about $1,159 per student. It costs much more than that to educate each child.
Right now the rest of the money comes from places like the Highland Park School District in Dallas which has a tax base of $8.5 billion. With a tax rate of $1.61, they collect $99.2 million each year. They have about 6,000 students, so they raise $16,533 per student with almost the same tax rate.
If the Highland Park tax rate were only 40-cents, they could still provide over $4,000 for each child in their school district. Here on the border, we tax ourselves to the maximum, and we can barely provide $1,000 per student.
That is what it means when we talk about rich and poor school districts.
I believe the state of Texas has an equal obligation to provide a quality education to every school child in Texas’ public schools.
A great danger I see in the proposed "cure" for funding public education in Texas is that there will be the danger of property taxes creeping back up after some other tax scheme is adopted. This would be an added tax on the people of Texas and particularly on property owners.
Also, even if a new maximum tax rate for school property taxes is set at 75-cents, or 50-cents, it seems to me that scheme will also fail the constitutional test for a state property tax since local districts will likely increase taxes to the maximum as time passes, making such a tax, in effect, a statewide supplemental property tax for funding education, something the constitution forbids.
I am opposed to increases in the sales tax because it puts the heaviest burden on low-income and middle-class families who must use most of their income just to live from month to month.
Families with higher incomes are able to put money aside and invest their extra cash in property, or stocks, or retirement accounts where there is no sales tax.
That means low and middle income families pay a higher percentage of their income as sales taxes on things they buy each month even though they start out with less income.
The state constitution also forbids an outright income tax in Texas. Those who want to pass a state income tax frequently argue that state income taxes would be deducted from federal income taxes.
However, experts I have spoken with say that is not exactly true. For example, to make it easy to do the math without a calculator, let’s take a nice round number like $100,000 for a family income. A family with $100,000 in taxable income might fall in the 30% federal tax bracket and owe the federal government $30,000 in taxes.
If Texas had a 5% income tax, then the homeowner would also pay Texas $5,000 in state income tax. They could claim that $5,000 as a deduction from their $100,000 taxable income for their federal taxes, so then they would only pay taxes on $95,000 in income, or about $28,500.
So the family would save $1,500 on their federal taxes. But, they would have to pay an extra $5,000 on their state income tax. That is an additional tax of $3,500, no matter how you cut it.
At only a 1% state income tax rate, the state tax would only be $1,000, but the "savings on your federal income tax would only be $300, leaving an additional $700 to be paid to the state.
I do not believe the people of Texas will agree to amend the Texas constitution to allow an income tax.
The other suggestions of higher taxes for business strike me as unlikely when you consider that big business has strongly supported the dominant party in Texas in the last two elections. I am not sure suggestions to put additional taxes on the businesses of Texas are really serious. They might just divert attention from other tax suggestions that are more controversial.
These are serious matters that demand serious solutions, and I am not going to tell you I have the answers when every legislator in Texas for the past 20 years, or longer, has grappled with the challenge of school finance without real success.
I will keep the interests of my south Texas friends and neighbors, the voters who elected me to represent them in Austin, in the forefront of my mind as I examine the various proposals that are presented in the months ahead. Please feel free to contact my office to give your views on this issue, or any other.