School finance mandate dissolved

May 26, 2006, 1:38AM
School finance mandate dissolved
Chance of funds being lost as of June 1 now gone

By JANET ELLIOTT
Copyright 2006 Houston Chronicle Austin Bureau

AUSTIN - A state district judge Thursday dissolved an injunction in a five-year-old school finance case, removing the threat that schools could lose funding June 1.

Judge John Dietz of Travis County signed the order in response to a motion filed by Texas Attorney General Greg Abbott. The motion said the Legislature fixed constitutional deficiencies in the school finance system during the special session that ended this month.

"This is the end of the road for the injunction," said Mark Trachtenberg, who represents 47 districts that sued the state over its funding system.

The districts did not oppose the motion to halt the injunction. But they warned that their position "should not be construed as a wholehearted endorsement of the legislation or an admission that the school finance system is on firm constitutional footing going forward."

The Legislature finished work earlier this month on a package of bills that will replace one-third of local school property taxes with money from a new business tax, higher cigarette taxes and budget surplus.

The case is known as West Orange-Cove after a property-rich consolidated school district in East Texas. The lawsuit was launched in 2001 by West Orange-Cove and three other school districts that had reached the state-mandated property tax cap of $1.50 for maintenance and operations.

More than 300 districts ultimately joined the lawsuit.

Dietz ruled in 2004 that the system amounts to a state property tax prohibited by the Texas Constitution and also that the overall funding was inadequate. He initially set a deadline of Oct. 1, 2005. The Texas Supreme Court upheld Dietz's ruling on the property tax issue only and set a new deadline.

The June 1 deadline was key to lawmakers reaching agreement on new taxes this year, after four previous failed attempts over the past two years.

The school districts in their motion warned that restrictions lawmakers put on their tax rates could harm the financial "breathing room" they will have in the coming school year. They also expressed concern that the new tax revenue was dedicated to property tax relief.

"The primary focus of the legislation was property tax relief, not putting the school finance system on firm financial footing," the districts said.

janet.elliott@chron.com

http://chron.com/disp/story.mpl/metropolitan/3898638.html