Here are some of the major proposals to be considered at the special-called session of the 78th Legislature convened on Tuesday and expected to last 30 days.
Performance Incentives
At the top of the headline list are “performance incentives” for districts, schools, and teachers, described by Gov. Perry as $500 million dedicated to rewarding those personnel and schools that score highly or show strong improvement on accountability factors. Supporters say financial incentives are needed to drive academic improvement. Critics point out that this money was effectively cut from school employees’ health insurance last spring, that such a program will encourage even more “teaching to the tests,” and that individual rewards are no substitutes for a sound system of pay and benefits.
Property Tax Cuts
Perry wants to cut school property-tax rates immediately by 25 cents per $100 valuation and create a constitutionally mandated buy-down (from $1.50 to 75 cents) using budget “surpluses” in each biennium. Other proposals call for deeper cuts but don’t include the buy-down. Critics argue that it’s not clear how school funds are supposed to be sustained against falling revenues, and that at the Capitol a “surplus” just means more money than we had last biennium – not more money than is needed for state services and growing population. This is a stealth plan to mandate state budget cuts no matter what the fiscal and political circumstances.
Split Tax Roll
The governor proposes collecting most business and commercial property taxes statewide and redistributing that revenue to most school districts on a per-weighted-student basis, including higher allocations for ESL and special ed. Businesses suspect they would be targeted for future increases, but Perry’s plan proposes the buy-down be “constitutionally linked” between commercial and residential rates, forcing both downward together. Others point out that as many as 20 school districts heavy with residential property wealth could escape equity limitations, and other plans would move all school taxes statewide, with some local enrichment.
“Sin Taxes”
These include higher taxes on cigarettes, liquor, adult entertainment, and expansion of gambling (video lottery terminals, i.e., slot machines) as substitutes for lowered property taxes. Pols like taxing “unhealthy” (i.e., politically unpopular) activities, but religious groups and cultural conservatives balk at state dependence on (or promotion of) “immorality.” Moreover, funds thus raised are volatile and unpredictable – Capitol buzz is that the VLTs at casinos and racetracks are more about bailing out unsuccessful racetracks than funding schools. Open question: Is smoking a worse “sin” than failing to fund education and public health?
Business Activity Tax
This is essentially an attempt to close the corporate franchise tax loophole – whereby “partnerships” are not taxed – by creating a lower-rate tax that covers nearly all businesses in the state. Lt. Gov. Dewhurst says the Senate may propose such a tax, and it has some bipartisan support as broad-based and sufficient to the education funding needs. Many business groups and Lege conservatives oppose it strongly, however, and others would prefer raising the state sales tax – already one of the highest in the nation. Prospects seem slim – this has been shot down regularly by the lobby.
Miscellaneous
Public school advocates fear voucher plans, school “reforms” (bigger class sizes, more administrative power), “home rule” (freeing favored districts of state accountability or regulation), virtual vouchers, more charter schools … perennials mostly rejected by earlier sessions. If the governor allows, this session could also see unrelated matters: reconsideration of CHIP funding or “tort reform” (e.g., corporate insulation from asbestos lawsuits).
This article appears in April 23 • 2004.
