Thursday, January 13, 2005

Lawmakers Make Education Recommendations

Lawmakers make education recommendations
State property levy, revamped franchise tax win early support

By Jason Embry
Thursday, January 13, 2005

Lt. Gov. David Dewhurst secured unanimous support in the Texas Senate on Wednesday for a school finance plan that cuts property taxes and raises teacher salaries but does not spell out how the state would pay for those proposals.

The plan is not a bill but rather a list of goals.

It would create a state tax of $1 per $100 of assessed property value to replace the local school property tax for maintenance and operations, which is capped at $1.50. It also would expand the corporate franchise tax to all businesses but sole proprietorships.

Dewhurst's outline calls for other tax increases and other new sources of revenue to provide $1.6 billion per year more than the current local property tax while saying that overall education spending in the state will grow by more than 10 percent.

Senators still must determine, however, where they will find the money to make that happen.

Lawmakers have discussed increasing the sales tax, motor vehicle sales tax, and cigarette and alcohol taxes, but Dewhurst did not say how much those taxes might go up.

Tax bills usually start in the House, and Dewhurst said the Senate does not want to step on House members' toes by outlining a full tax plan.

"This is meant to be a starting point," Dewhurst said. "Our feet are not in concrete."

Dewhurst had promised over the past couple of weeks that senators were moving toward consensus, but the absence of specifics from his plan indicates that much of the dirty work remains.

His announcement follows the pattern set by the Senate's approval of a school finance plan in May 2003: Dewhurst announcing a bipartisan consensus while the House is still trying to form one.

That time, the catch was that senators could vote for the plan knowing that the House would not act on it. This time, they can support the goals that Dewhurst signed off on but later oppose the legislation if they do not like the tax provisions or its affect on their local schools.

Sen. Gonzalo Barrientos, D-Austin, said he will not feel obligated to support the plan when it becomes a bill.

"I view the document as expressing general goals which every member of the Legislature should support, goals like providing new money for public education, reducing burdensome property taxes and making sure all businesses do their part," Barrientos said. "I also view the document as expressing a range of ways to meet those goals. Obviously I like some more than others. The devil is in the details."

Senators touted the statewide property tax as the best way to see that schools have nearly the same amount of money per student regardless of their local property values.

Voters would need to approve a constitutional amendment allowing the state tax.

The proposal for a state tax is likely to face heavy resistance from school districts, many of whom say a state tax would limit the control of local school boards.

The plan would allow local voters to approve an additional 15 cents on their tax rate, which would be phased in over six years. The state would supplement that money so that districts with low property values would have roughly the same amount of money per student as districts with the highest values in the state.

Sen. Steve Ogden, R-Bryan, said the corporate franchise tax rate would fall from 4.5 percent to 1.95 percent, and he said it could be as low as 1.25 percent after federal tax deductions.

"It gives us the opportunity to overhaul the state's tax system, making it fairer, making it more equitable, to make it more broadly based," Ogden said.

Dewhurst said the plan would not amount to an overall tax increase because the $5.6 billion lost in property taxes the first year would be replaced by other taxes. The rest of the new money in the system would come from other means, such as closing loopholes, more aggressive collection of delinquent taxes and growth in revenue from an improved economy.

Dewhurst also said he wants teacher salaries to reach the national average, although it is not yet clear whose gauge of the national average lawmakers will use or whether it will include the cost of benefits. The National Education Association reported last year that the average teacher salary in Texas, $40,494, ranked 32nd in the country.

Senators also said they want to rate high schools based on how well they prepare students for college, give schools more flexibility in spending their textbook money and expedite the closing of charter schools that perform poorly or mismanage their money.

Announcing even the outline of a plan was a bold move on Day Two of the 140-day legislative session.

Though politicians from both parties claim that school finance is among their priorities, passing a plan is difficult because of the decisions it forces on raising taxes or taking significant dollars away from other parts of the budget.

Getting senators to agree on a fleshed-out school finance bill will be "considerably more difficult," Barrientos said.

Gov. Rick Perry described the Senate announcement as a first step toward school reform.

"This plan marks a good starting point and shows that legislative leaders are committed to addressing this important issue this session, as am I," he said.

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