A constitutional fix for school finance

Published 5:38 pm Wednesday, July 26, 2017

AUSTIN — There’s no lack of talk in the Capitol this summer about fixing school funding, or of the burden that property tax payers carry in relation to the state’s tab.

But while there’s consensus that escalating property tax bills can’t be addressed without fixing school finance, Rep. Jay Dean, R-Longview, may have best captured Texans’ sentiments about making homeowners shoulder 68 percent of the cost public education when he spoke up in a Tuesday appropriations committee meeting.

“Ray Charles could see it wasn’t fair,” Dean said, referring to the late singer/composer, who was blind.

Yet, whether legislators will see their way clear to approving a measure that would let Texans in November 2018 vote on a constitutional amendment requiring the state to pay at least half the cost of public education is another matter.

Monty Exter, a lobbyist for the Association of Texas Professional Educators, gives the proposal zero chance of passing both chambers during the special session, but said it marks the start of important discussion.

“The House has been saying since the regular session that they don’t want to deal in gimmicks,” when addressing taxes, Exter said. “But you have to give an alternative to be credible.

“The conversation we heard yesterday was the first salvo in really defining the House’s argument in laying out a more substantial vision for how property tax reform could be realized.”

The proposal comes from Rep. Donna Howard, D-Austin, who in introducing House Joint Resolution 18 to the appropriations committee said wryly that “it’s not every day that you get to lay out a bill with a $23 billion fiscal note.”

In addition to requiring the state to pay at least 50 percent of the cost of maintaining and operating the public school system, the proposal would also prohibit the comptroller from certifying legislation containing an appropriation unless lawmakers met the requirement.

Exter said there was “too much noise” to consider Howard’s idea during 2017’s regular session, and that making headway through both the House and the Senate would be problematic in a 30-day special session.

“They do not pay attention to one another at all,” Exter said of the two chambers. “They might as well be running two different states at some times.” 

Howard acknowledged that implementing such a change wouldn’t be simple, saying in a telephone interview that “the devil is in the details.” 

Said Exter, “You’ve got to find some way to pay for it. That’s the devilish detail.”

Yet, the need is clear, said Howard, who laid out her view of the problem in a recent op-ed.

“As your property value grows, your resulting tax bill increases, and we’ve certainly seen a dramatic rise in property values throughout the state,” Howard wrote. “However, instead of funneling those new dollars directly into the classroom or letting school boards give taxpayers a break, the state takes advantage of rising values by ‘allowing’ homeowners to pay an ever-greater portion of public school funding.  

“Meanwhile, the state budgets fewer state dollars for school districts and uses that windfall elsewhere. This cost-shifting scheme effectively decreases the state’s share of school district funding when your property value increases.”

Tweaking the sales tax is one option for covering some of the cost, raising it a cent or two over a period of years.

While sales taxes are generally considered regressive because they disproportionately affect lower incomes, consumers have more control of their personal spending than their property taxes, Exter said. 

There’s also the suggestion that the state could generate an additional $1 billion or so annually by more aggressively investing its rainy day fund.

Burt Solomons, a former Republican state representative who during Gov. Rick Perry’s administration introduced a resolution that mirrored Howard’s, told the committee his proposal may have been ahead of its time. 

But he said, “you cannot have taxpayer relief unless you solve school finance,” even if it takes several years. 

“We used to be a junior partner but now we’re a minority partner with the school districts,” Solomons said. “You’re not going to solve school finance unless you’re a general partner.”

John Austin covers the Texas Statehouse for CNHI’s newspapers and websites. Reach him at jaustin@cnhi.com.