School finance moves one step closer to completion!

Senate approves tax reform
By Jason Embry
Thursday, May 11, 2006

The previously deadlocked Texas Senate unanimously approved a key piece of school finance legislation Wednesday night that would cut school property tax rates by one-third over two years, give all teachers a $2,000 raise and require schools to start class no earlier than the last week of August.

"We passed out a great bill," Lt. Gov. David Dewhurst said. "It's going to raise our teacher salaries, provide for incentives so our teachers work together and raise performance. It dramatically increases accountability, lowers local school property taxes and solves the lawsuit."


Senate Education Committee Chairwoman Florence Shapiro, R-Plano, and other senators celebrated the unanimous vote Wednesday.

The Senate also approved on a 20-10 vote a $1-per-pack increase in the cigarette tax that would be phased in, starting with a 75-cent increase in January.

Passage of the two bills puts the effort to change the school finance system back on track. But the 30-day special session that Gov. Rick Perry called to address the issue ends Tuesday, and the House and Senate still have a few issues to work out.

Whether everything in the education and tax cut bill makes it into law is in large part up to the House, where members passed their own version of the legislation, House Bill 1, a couple of weeks ago.

The House version did not include school changes such as the teacher pay raise and the new school start date, instead sticking to a tax cut.

House Speaker Tom Craddick said he would encourage House members to go along with the Senate changes, which would put the bill on Perry's desk.

"I think it's great," he said.

Both the House and Senate versions of the legislation aim to address the Texas Supreme Court's order that lawmakers act by June 1 to give school boards more room to raise or lower their tax rates. The Legislature has set out to cut property taxes because most districts now set tax rates that bump up against the state's maximum levy.

Senators passed their version of the bill after a week of intense discussions about how much to guarantee each school district in the state and whether to limit the amount of money that property-wealthy districts must share.

They resolved their differences by massaging the formulas that determine how much money schools receive.

Under the Senate plan, the amount of money that a school district is guaranteed in state and local funds for each penny in its tax rate would increase. That provision would increase the number of school districts that have access to the same amount of money per student, which was key in winning support from Democrats and Republicans from rural areas, where taxable property values are often low.

Senators reached a compromise by reducing the amount of guaranteed money for districts from the version of the bill that passed out of the Senate Finance Committee last week. That freed up more money for high school improvements coveted by Senate Education Committee Chairwoman Florence Shapiro, R-Plano.

The compromise also increased — from 4 cents of a tax rate in the committee bill to 6 cents, over a couple of years — the amount that a property-wealthy school district would not have to share with the rest of the state through the share-the-wealth system. Overall, the bill boosts school spending by about $1.5 billion.

"Teachers are not getting what they deserve, and Texas schools are not getting what they deserve," said Sen. Leticia Van de Putte, a San Antonio Democrat and head of the Senate Democratic Caucus. "But I support the bill because it is the only proposal this session that has any hope of moving public schools forward at all."

The bill would allow the state to dip into its $8.2 billion surplus to cut school property tax rates that are now at $1.50 per $100 in property value to $1.33 this fall, and $1 in fall 2007. That cut would save the owner of a $100,000 home $425 per year, once the tax cuts are phased in.

School boards could tack 4 cents back onto their tax rates this fall, and they could add more with voter approval. It will be much more difficult for school boards to raise money without voter approval than it is now.

The key difference in the new start date for schools is that districts no longer could ask the Texas Education Agency for waivers to escape the rule and start earlier than the last week of August.

Earlier versions of the bill said nonteachers, such as bus drivers, secretaries and cafeteria workers, would not receive $250 or $500 per year to help pay for health insurance after 2007. But senators stripped that language from the bill Wednesday, so the health stipend will remain in place indefinitely for those school employees.

House Bill 2, which would specifically dedicate business and cigarette tax revenues to reduce school property taxes, was sent to a conference committee Wednesday.

Craddick said he and Dewhurst had a "handshake agreement" on resolving differences between the chambers' versions.

On the cigarette tax, senators agreed to spend 5 percent of the money from the new taxes on anti-smoking programs. The rest would go toward property-tax cuts.

Along with the cigarette tax and money from the state surplus, the Legislature wants to pay for about $6 billion a year property-tax cuts with a new business tax. The House and Senate already have approved that tax and sent it to Perry for approval.

What Senate passed

* Tax rates would fall 11 percent this year, 33 percent next year

* $2,000 raises for teachers

* Additional incentive pay plan for teachers

* School would start no earlier than the last week in August

* Four years of math and science would be required for high school students, up from three