July 17, 2005
Coming down to the wire on school finance

It's hard to say where the ball is regarding the school finance reform plans (remember those? This session was supposed to be about school finance reform), since on Friday there was a sense of gloom and doom, and today there are stories claiming a deal could be struck Real Soon Now.

Legislative leaders seeking to overhaul the state's school finance system said Saturday that they might agree on a plan by today after Senate negotiators appeared to back away from a pledge to hold any increase in the sales tax rate to a half-cent.

Lt. Gov. David Dewhurst, the Republican who presides over the Senate, said the upper chamber remained hopeful that the state sales tax would go no higher than 6.75 percent -- up from 6.25 percent. But he left open the possibility that senators might accept a slightly higher increase if other taxes could be trimmed.

"Nothing's been agreed to," Dewhurst said. "The House has a proposal, the senators are looking at a proposal" and the two sides are close.

Since lawmakers began work on a plan that would lessen the reliance on local property taxes to pay for public schools, House leaders have advocated a full penny increase in the sales tax rate to help replace the lost revenue. The Senate has said any increase should be limited to a half-cent, largely because most of the chamber's 12 Democrats have strongly opposed a larger increase.

But with the 30-day special legislative session due to end Wednesday, that hard line could be softening as negotiations go down to the wire.

Yes, more weak knees from David Dewhurst and the Senate. At least not everybody is softening.

Sen. Eliot Shapleigh, D-El Paso, has vowed to talk the tax bill to death if it would increase the state sales tax more than one-half percent. The current tax rate is 6.25 percent, and the House proposed raising it to 7.25 percent.

He said businesses should take on more of the tax burden. Proposals for substantial revision of the state's business tax failed in both the House and Senate.

"Every single time the business lobby strips out taxes, it then shifts them to the middle class, so taxes on them go down and taxes on you go up," Shapleigh said.

The possibility of a filibuster is why everyone wants to make a deal today.

Tax negotiators met publicly twice on Friday but remained at odds over how much they should increase the sales tax, whether there should be increases in alcohol taxes and how much they can cut in property taxes.

Sen. Steve Ogden, R-Bryan, said the two sides need to reach an agreement by early Sunday to avert a filibuster attempt by tax bill critics in the Senate.

He and his House counterpart, Ways and Means Committee chairman Jim Keffer, R-Eastland, bemoaned the fact that Texas lawmakers will not cut property taxes as much as they had talked about earlier this year because neither side passed a sweeping reform of business taxes.

"Sometimes you've got to go in increments," Keffer said.

And not all of the opposition is coming from the progressive side of things:

Perry and Dewhurst acknowledged that some oil and gas companies that would have to pay the franchise tax for the first time are trying to persuade lawmakers to vote against the tax plan.

"I would not want to be a member of the Legislature to go back to my district and to say that I could not support a revenue shift to those companies that should have been paying the franchise tax for the last decade," Perry said.

Yeah, right. The day Rick Perry scolds a legislator for bowing to a corporate master is the day NASA announces it's replaced the space shuttle with a lawn chair and balloons.

For what it's worth, one reason given for possibly bending on the sales tax hike is an alteration to the property tax cut:

Sen. Royce West, a Dallas Democrat and a key member of the school finance negotiating team, said that if lawmakers agree to increase the homestead exemption from $15,000 to $22,500, it could offset an increase in the sales tax.

"A homestead exemption is spread more equally through the different socioeconomic classes," West said.

Raising the exemption was a cornerstone of the Democratic plan, but this feels more like a pittance, and not nearly enough to offset the burden of a full percentage point increase in the sales tax. Not to mention that some other thing will have to be jiggled to pay for that. Don't give away the store for a stick of gum, folks.

So like I said, at this point who knows what they're up to, and who knows if they're close in a meaningful sense or in a we-have-to-tell-the-newsies-something sense. The only related item I see on the blogs is this Jeffersonian post, which says that Phillip Morris is running ads against HB3 because of the dollar-a-pack hike in the price of smokes. Probably won't have much more effect than those anti-telecom bill ads, but who knows, maybe it'll be the fulcrum to get another rep somewhere to vote No. Stay tuned.

Posted by Charles Kuffner on July 17, 2005 to Budget ballyhoo | TrackBack

I say jack up the taxes on Beer and Liquor and make the fraternity boys pay for the education they pissed away in high school and help give all the teachers they pissed off a raise.

Posted by: matthew_lt on July 17, 2005 11:10 PM

It sounds as though the robin hood recapture tends to prevent capitalization of the value of a better school district.

Posted by: John S Bolton on July 18, 2005 3:04 AM