Perry threatens to call another session

Tax negotiations going slowly, although aide hints of deal on schools

10:25 AM CDT on Tuesday, July 19, 2005

By TERRENCE STUTZ and ROBERT T. GARRETT / The Dallas Morning News

AUSTIN – Gov. Rick Perry issued a blunt warning to lawmakers Monday – cut a deal on school finance and property taxes or spend August in Austin.

"He is telling them ... that he will call them back if they don't get the job done by Wednesday," said Perry press secretary Kathy Walt, as negotiations were slow-going for yet another day.

Wednesday is the final day of the 30-day session called by Mr. Perry last month. Ms. Walt said that although the governor would decide the precise day to start another session once the current one ends, she added: "Thursday looks like a good day."
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Still, there were signs of a possible breakthrough late Monday as aides to the governor said he and legislative leaders had agreed on a plan to boost education funding, increase teacher salaries and enact several education initiatives.

Ms. Walt said Mr. Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick "agreed in principle" during a three-hour meeting in the governor's office Monday.

There was no accord, however, on the other major legislation, a tax-swap plan that would lower school property taxes in exchange for higher state taxes on consumers, smokers and some large businesses. And lawmakers reiterated that the bills are too closely linked for one to pass and not the other.

All teachers would receive a $1,500 raise this fall and be eligible for an additional $500 that school districts would decide how to distribute. Next fall, districts would have an additional $1,000 per teacher to distribute, but there would be no across-the-board raise.

Lawmakers would give districts about $2.4 billion in new money over the next two years. That represents an overall increase of about 3.5 percent, with all districts expected to be guaranteed at least 3 percent more funding.



Share-the-wealth cap



House negotiators appeared to have won major concessions from the Senate on "Robin Hood" sharing by property-rich districts, including a 38 percent limit on how much they would have to surrender to poorer districts. The cap would be phased in, limiting the initial windfall for wealthy districts.

The measure also would create a new merit pay program for teachers and establish a mandatory starting date for the school year, the Tuesday after Labor Day. That would not take effect until the fall of 2006.

Most of the changes have virtually no support from educator groups.

"I've got 98 school districts. I haven't had one call me and say, 'Man, we've got to have this,' " said Sen. Ken Armbrister, D-Victoria.

Legislative aides said that Mr. Dewhurst and Senate leaders were mulling a proposal by the governor and Mr. Craddick, R-Midland, to raise the state sales tax to 7 percent and for the first time apply the sales tax to auto repairs, bottled water and computer repairs. In addition, the plan would slap the sales tax on all Internet access charges.

The top school property tax rate would fall by about 30 cents over two years.

The initial Senate reaction to the tax offer was less than enthusiastic, some senators said. Democrats have opposed going higher than 6.75 percent – a half-cent increase – and Republicans want to avoid going to 7 percent because that would give Texas the highest state sales tax in the country, along with three other states.

The plan also does not include sales tax credits for the poorest Texans proposed by the Senate.


Filibuster possible



Looming over the last-minute talks were threats by Democrats in the Senate to filibuster both bills.

Senate Democrats quizzed Mr. Dewhurst about procedural rules and voting requirements in the last two days of the special session.

Sen. Eliot Shapleigh, D-El Paso, said he had soft-sole shoes ready to wear if he launches a filibuster to try to kill the tax bill. Under the long-standing Senate tradition, a senator can talk legislation to death as long as he can remain standing at his desk on the Senate floor.

.Citing nonpartisan studies indicating that the tax-swap bill would benefit only Texas families earning more than $140,000 a year, the Democrat said: "This legislation is a tax increase on nine of 10 Texans, just so one in 10 Texans – the wealthiest in the state – can have a tax cut."

He also complained about the Legislature's decision to abandon an overhaul of the state's main business tax, the franchise tax. "The business lobbyists have come in here day in and day out, and stripped business taxes from every bill," Mr. Shapleigh said.

House members appeared buffeted by opposition from oil and gas interests and heavy industry, which would see their business tax loopholes closed and not as much property tax relief as they had hoped.

"I just heard there's 89 votes against it," Rep. Tony Goolsby, R-Dallas, said of the tax bill. The House has 150 members.

Sen. Steve Ogden, R-Bryan, the Senate's lead negotiator on the tax-swap bill, said: "The business lobby is actively trying to kill this bill over in the House."

Mr. Ogden said the only way to dissuade the governor from calling another session immediately would be for the tax bill to be "voted down decisively" in the House.

He said enough senators support his chamber's version of tax legislation for it to pass, and he scoffed at widespread reports that any version would be soundly defeated in the House.

"I've never seen a case where the speaker couldn't round up the votes – ever," said Mr. Ogden, who spent eight years in the lower chamber.

Meanwhile, the Senate approved a constitutional amendment that would increase the minimum homestead exemption for school property taxes by 50 percent – from $15,000 to $22,500 of the appraised value of each home. The vote was 29-0 on the proposal, which already has been approved by the House.

Democrats sought to increase the exemption to $30,000 but were outvoted by the Republican majority.

E-mail tstutz@dallasnews.com and rtgarrett@dallasnews.com
SCHOOL FINANCE DEVELOPMENTS

WHAT HAPPENED

Lawmakers struggled to reach agreement on several provisions, including limits on "Robin Hood" wealth-sharing and what to include in an expanded sales tax.

WHAT'S NEXT

Gov. Rick Perry is threatening to order another 30-day special session. The state Supreme Court is considering an appeal of a court's ruling that would shut schools down Oct. 1 if funding isn't increased.

FOR THE SCHOOLS

Mr. Perry vetoed the entire state education budget, but lawmakers are close to passing those bills again. Plus, provisions in state law allow for the money to be spent anyway, so schools will almost certainly start on time and see no immediate effect, lawmakers say.