Tax bill not 'total fix' to school finance suit

July 6, 2005, 1:18PM

THE TEXAS LEGISLATURE

Tax bill not 'total fix' to school finance suit

Craddick says funding plan has merit as House and judge take up two sides of issue
By R.G. RATCLIFFE and JANET ELLIOTT
Copyright 2005 Houston Chronicle


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AUSTIN - Speaker Tom Craddick said Tuesday the $7 billion property tax cut bill the House plans to debate today would not resolve a lawsuit challenging the state's system of funding public schools.

Today the Texas Supreme Court is hearing the state's appeal in a lawsuit that 329 school districts won over how the state pays for public schools.

One of the key issues is a district judge's ruling that the state's mandated property tax cap of $1.50 per $100 of taxable valuation amounts to a statewide property tax that violates the Texas Constitution because about half of the 1,040 school districts have already set the maximum rate.

"I don't know all the legal sides of it. I'm just told it (the House tax bill) doesn't solve all the problems we've got, doesn't solve the statewide property tax avenue of it," Craddick said.

He later issued a statement saying he thinks the tax bill combined with a school finance bill "will establish a fair and constitutionally sound school finance system, and we hope that it will pass muster with the courts."

The tax bill scheduled for debate in the House would cut public school property taxes by setting a new maximum rate of $1.12 by 2007, with an additional 15 cents of taxation available for local districts to raise.

Critics say that would just set a new, lower unconstitutional statewide property tax cap, but supporters maintain the "local enrichment" tax would make the new system constitutional.


Education funding claims
The lawsuit accused the state of violating the Constitution and prior Supreme Court rulings on public school finance. In addition to the statewide property tax claim, the districts also say the state is inadequately funding public education.



State District Judge John Dietz, a Democrat, ruled in the districts' favor last year.

Rep. Kent Grusendorf, R-Arlington, author of the school finance bill, said he thinks the state will win the portion of the lawsuit dealing with adequate funding.

"I don't see the adequacy claim as having much traction outside of a court such as Judge Dietz," Grusendorf said. "It's more of a political question than a legal question."

Grusendorf said the most legitimate portion of the lawsuit is the statewide property tax issue. But he thinks the House tax bill and school finance bill would solve the problem because they have mechanisms for future property tax cuts while giving school districts some leeway in setting their own taxes.

Solicitor General Ted Cruz will argue that the state's public schools are adequately funded, that students are meeting the challenges of a tougher series of academic tests and that it's time for the court to stop meddling in school finance.

Craddick said even if the current legislation does not resolve the school finance lawsuit, it is worth pursuing.

"It changes and revives the school system and makes it better. ... And two, it just gives you property tax relief across the state that people want and I think they deserve. And it gives us a new basis to try and fund schools with," Craddick said.

"It fixes some pieces, but I don't think it's a total fix."


Democrats' opposition
Democrats, meanwhile, blasted the tax bill because all the money it raises from higher business and consumer taxes goes to cutting school property taxes with none being used to improve public schools.



A legislative analysis of the plan, they said, shows 80 percent of all Texans will pay more taxes each year to finance a tax cut for upper-income earners.

"This is money transferred from middle-income households in Texas to give a tax break to those who earn more," said Rep. Garnet Coleman, D-Houston.

Rep. Senfronia Thompson, D-Houston, said Republicans are misleading Texans about what the tax and school finance bills will do.

"The leadership is selling a bill of goods to the public that they are getting tax relief and support for public education, when that is not true," she said.

The Legislature is meeting in a special session called by Gov. Rick Perry to address public school finance and property tax cuts. The governor started a second round of radio commercials this week urging citizens to call their legislators and demand a property tax cut.

r.g.ratcliffe@chron.com
http://www.chron.com/cs/CDA/ssistory.mpl/metropolitan/3254094