On the Lege

Lt. Gov. David Dewhurst

Last Wednesday, just one day into the 79th legislative session, the entire Texas Senate threw its unanimous support behind an ambitious school finance proposal that would cut property taxes, raise teachers' salaries, and inject more money into public education.

Who says legislators can't get anything done?

Actually, it was a little more complicated than that. Not the details of the plan; there aren't any yet – but the political maneuvering that took place before Lt. Gov. David Dewhurst could declare, at a late-afternoon press conference, that all 31 senators had signed on to a plan for reforming school finance. Dewhurst had spent the earlier part of the day convincing, cajoling, and selectively arm-twisting senators to agree to an outline that's intended to serve as the road map for shaping the Senate's school finance proposal (Senate Bill 2). But despite the headlines and sound bites that greeted Dewhurst's announcement, it turns out that the only thing senators unanimously agree on with respect to the Texas Children First plan is what "the plan" is – a list of goals. After the initial fanfare, in retrospect the whole episode became a replay of the Senate's similar outburst during the failed school finance special session last spring – a pre-emptive photo-op strike against the House that in the end went exactly nowhere.

The six-page wish list calls for replacing about $5.6 billion in local school property taxes with a statewide property tax of $1 per $100 of assessed property value (currently capped at $1.50), with revenue equally distributed to all school districts. Other suggested revenue sources include increases in the state sales tax, motor vehicle sales tax, and cigarette and alcohol taxes. The plan would also require all businesses (except sole proprietorships) to pay a franchise tax, adding an estimated $3.5 billion in new revenue. The proposal is somewhat similar to one released the day before by the Texas Federation of Teachers that would, among other things, extend the state sales tax to most services (except medical and child care), establish a broad-based business tax on gross receipts, and boost teachers' salaries by $3,000. By contrast, the competing Texas Association of Business proposal urges the elimination of the franchise tax altogether and urges lawmakers against turning employers into "sacrificial lambs" as a means of reforming school finance.

Even from within, the Senate plan has drawn varying degrees of support. Austin Sen. Gonzalo Barrientos says he favors the proposal's overall goals of reducing property taxes and reforming the franchise tax. "I also view the document as expressing a range of ways to meet those goals," he said. "Obviously, the devil is in the details." But Barrientos and others oppose increasing sales taxes, which would hit low-income consumers especially hard. "Our tax system is regressive enough already," he said. The senator also offered support for the plan's call to improve the quality of education in the state but added, "I don't necessarily think more standardized tests for kids and more paperwork for teachers is the answer, and that's what 'accountability' has come to stand for in Texas."

On that score, the Texas State Teachers Association expressed concern that under the Senate plan, teachers' pay increases would be tied to incentives and substantial changes in the accountability system. As it is, the group points out, the average Texas teacher's salary already falls more than $6,000 below the national average.

On the House side, Austin Rep. Eddie Rodriguez took an even dimmer view of the Senate proposal. "It has nothing to do with providing more money for schools," he said. "Increasing taxes will only provide a patchwork solution, which means we're going to have to look at this issue again in five years." Rodriguez acknowledges that his own proposal for fixing the school finance system – by establishing a state income tax – is far from becoming a reality in tax-defiant Texas. "[The Legislature] is going to be passing on this," he said of his proposed legislation, "and the kids are going to suffer for it." Still, even off the table as legislation, the income tax idea appears to be percolating. Late last year, veteran Rep. Delwin Jones, R-Lubbock, told a school finance summit in Lubbock that the Legislature should look at all funding options, including a state income tax, when considering school finance reform. According to the Lubbock Avalanche-Journal, Jones told the summit that he had asked the state comptroller to research how much income tax would be needed to offset school property taxes.

Still uncertain is whether a previously failed school-funding proposal – slot machines – will see a revival this session in spite of bipartisan opposition. Comptroller Carole Keeton Strayhorn raised the notion anew when she laid out her revenue projections on Jan. 10. To hear Strayhorn tell it, Texas could have raised $1.5 billion in new revenue had others followed her lead in the last regular session and supported a constitutional amendment allowing slot machines at Texas racetracks. (Gov. Rick Perry pitched the proposal in the spring special, but it was quickly scuttled by social-conservative opposition.) It's a long session, and as one or another interest group rejects particular taxes, the "free money" of casino gambling will look increasingly attractive to beleaguered legislators. But not yet. Despite a strong gambling industry lobbying force that now includes former Perry chief aide Mike Toomey, the slot machine proposal doesn't even appear to be at the starting gate. Strayhorn may once again find herself the odd woman out.