School bill probably, tax bill probably not

At this point, HB2 (the school finance bill) seems to be headed towards acceptance (or at least an up-or-down vote), while HB3 (the tax bill) is still unresolved. Since HB2 won't take effect until HB3 does, that means we're still at a point of no accomplishment, which in turn means another special session to follow on the heels of this one.

The Statesman has a good summary of HB2, which is considerably smaller in scope than it was originally intended to be.

[HB2] boosts school funding by about $2.4 billion over two years, increases teacher pay and reduces the amount of money that property-wealthy school districts must send away to property-poor districts as part of the state's share-the-wealth funding system.

"It will provide more money for every Texas school district, including more money for districts serving at-risk and limited English proficient students, small and rural districts," said House Speaker Tom Craddick, adding that it also boosts spending for transportation and technology.

Democrats and at least one teacher group assailed the final proposal as unfair and inadequate, and its fate remains uncertain.

[...]

The spending plan calls for $1,000 across-the-board raises for teachers this year, plus money for a $500-per-teacher increase in each of the next two years that local school districts would decide how to distribute.

They could use that money to give another across-the-board increase or find another way to distribute the money, such as giving more money to teachers who mentor colleagues or work in subjects that tend to lack certified teachers, such as special education.

Teacher groups say the across-the-board raise is really $500 because it includes the restoration of a health insurance stipend that the Legislature cut from $1,000 to $500 in 2003.

"The bill is highly insufficient for public education," said Brock Gregg of the Association of Texas Professional Educators.

The legislation also requires school to start after Labor Day beginning in fall 2006, gives bonus pay to teachers who work in low-income schools that show improvement, allows private companies or other outside groups to take over schools that consistently have low test scores and moves school board elections from May to November.

Under the plan, per-student spending in the Austin school district in two years would be 7.6 percent higher than if the current school finance system remained law, according to projections released by House officials late Tuesday. Spending would be 8.8 percent higher in Eanes and 4.3 percent higher in Round Rock.

The plan reduces the amount of money that districts with higher property values, such as Austin, have to share with the rest of the state. Legislative estimates show Austin sending $155 million to other districts in two years under current law; under the proposed plan, the district would send away just $348,000.

Districts with the highest per-student property values in the state, such as Eanes, would not have to share more 38 percent of their local tax revenue with the rest of the state through the share-the-wealth system, though that cap could fluctuate in the future.

Some of the districts share more than 70 percent of their local taxes under the current system.

Under the cap, wealthier districts would be able to raise more money with a lower tax rate than districts in other parts of the state.

But under a complicated format, the spending increases allowed for wealthier districts would be tied to overall revenue growth for schools around the state. So the more that spending goes up for property-poorer districts, the more money the wealthier districts can raise and keep in local taxes.

Got all that? I recall the initial efforts on HB2 intended to spend an additional $3 billion, which at the time was criticized as being just enough to keep up with inflation and increases in the school population. Now we're talking $2.4 billion, with some of that money being earmarked to specific items. That doesn't sound like progress to me, but it's what we're likely to get. And there's still the question of what the Texas Supreme Court will ultimately say.

As for the companion tax bill HB3, the picture looks bleak.

Several factors have complicated the push for a tax-swap proposal, including questions about whether there is sufficient support in the House. Lobbyists for companies that would have to start paying the corporate franchise tax have worked to build opposition to the bill.

"It's questionable as to whether this would pass the House floor in its current form," Rep. Charlie Geren, R-Fort Worth, said Tuesday of a recent House proposal.

Senate Democrats have also threatened to filibuster any bill that raises the state sales tax, currently at 6.25 percent, higher than 6.75 percent.

Sen. Steve Ogden, a Bryan Republican and the lead tax negotiator in the Senate, said balancing tax increases and tax cuts has proved difficult.

"This is not really a tax-cut bill, this is a tax-shift bill," Ogden said. "It's hard to build a solid constituency around a tax shift, because for every person that gets a break, another one has to pay a higher tax. And so every time you make somebody happy, you make somebody else mad."

Frankly, I'm amazed that Senator Ogden would say that out loud. That's the point that many Democrats, especially Eliot Shapleigh )he of the filibuster threat), have been making all along. Well, it's almost Shapleigh's point, since it's really more the case that under HB3, for every person that gets a break, about nine others wind up paying more. But at least Ogden recognizes that this is a feature of any "revenue neutral" tax reform.

More coverage can be found here, here, and here. On the blogs, Aaron Pena notes this story about business' dissatisfaction with the various tax plans; Nate, Matt, Eileen, Eye on Williamson, PinkDome, and Save Texas Reps also comment.

Posted by Charles Kuffner on July 20, 2005 to Budget ballyhoo | TrackBack