March 02, 2005
HB2 passes out of committee

House Bill 2, the omnibus bill overhauling school finance, passed out of committee yesterday.

The Committee on Public Education voted 6-3 in favor of the bill. The committee's three Democrats, Houston Reps. Harold Dutton and Scott Hochberg along with Brownsville Rep. Rene Oliveira, cast the "no" votes.

Committee Chairman Kent Grusendorf, R-Arlington, said he expects the bill to be debated by the full House on Monday.

"House Bill 2 provides more money not as much as some people would like but it provides more money to our schools," said Grusendorf.

The bill would add new spending of $3 billion to the $60 billion spent during the biennium on public schools in Texas. Grusendorf said the money will be appropriated during the regular state budget process.

Every school district would be guaranteed a 3 percent increase for the 2005-06 school year, an amount many critics said would barely cover inflation.

Hochberg said the bill doesn't target spending to the lowest-achieving students, those living in poverty, with limited English skills and at risk of dropping out.

"We know where our biggest areas of need are, and this bill spends a lot of money without addressing those needs," he said.

Hochberg also criticized the House leadership for writing a major tax bill but using all of the money to lower property taxes.

"Absolutely none of that is going to go to the schools in Houston. It's a tremendously missed opportunity," he said.

Hochberg is one of the go-to people on school finance, and he was brought onto this committee to give it some gravitas. His pointed remarks about what the committee produced pretty much says it all.

Hochberg is far from alone in his opposition here, though you'd barely know if from reading this article. Andrew D quotes extensively from the Quorum Report with the spectrum of dissent. We'll see if any of that matters. Meanwhile, Rio Grande Valley Politics weighs in and Inside the Texas Capitol gives a quick preview of highlights from the forthcoming Democratic alternative:

- Tripling the exemption for the homestead tax from $15,000 to $45,000, providing a broader tax relief than the statewide property tax currently touted by the GOP.

- Buying down the property tax from $1.50 to $1.25. They will attack the fact that the GOP plan for lowering the property tax to $1.00 since it mainly benefits homes that cost more than $250,000.

- All in all, this Democratic plan will cost roughly $6.64 billion. Since the GOP set the spending bar at $11.789 billion, then that provides over $5 billion in new money to schools, which is greater than the $1.5 billion actually provided by the Republican plan (or even the $3 billion that the GOP plan wants). Most of the Dem's proposed spending would go to across-the-board teacher raises and once again providing health insurance to all other school employees.

Hmm, so it costs less, provides broader tax relief, and allows for more money to be spent on the schools. Obviously, we can't let that happen!

Getting back to the Chron story, how are the Republicans going to pay for their plan?

The bill would restore a $1,000 health care stipend for teachers that was cut in half during the last legislative session. Districts would be required to set aside 1 percent of their budget for locally designed teacher pay incentives, and a separate provision would provide funding to reward teachers in low-performing schools whose students show test gains.

The tax bill, HB 3, may be unveiled today. Speaker Tom Craddick said it includes a hike in the state sales tax, a new business tax based on a company's payroll and an increase in the cigarette tax. The bill will need to raise about $11 billion during the biennium to replace property taxes cut by HB 2.

Kathy Walt, spokeswoman for Gov. Rick Perry, said the governor "still has concerns" about a payroll tax. His opposition to a House committee-proposed payroll tax contributed to the failure last year of a special session on school finance.

But Walt also noted that it is still early in the session and the governor will continue to work with the House and Senate on a revenue bill.

Bill Allaway, president of the Texas Taxpayers and Research Association, a business group, said he believed House leaders were still trying to figure out how to deal with large employers' concerns about a payroll tax.

One way they're dealing with it is lobbying for a cap on it, as Andrew D notes. That's been a recurring theme for tax reformers, and it's a big problem in ensuring that any new system really is broad-based, unlike our current, useless "franchise tax". Pay close attention here, because everyone with a dog in this fight is going to claim that they need to be excepted for the good of the state. All I can say is that this is gonna be ugly, so it's just as well that this bill got out of committee as early as it did.

Posted by Charles Kuffner on March 02, 2005 to Budget ballyhoo | TrackBack