I think of all the bad things I could say about this series of special session on something that used to pretend to be school finance reform, the certainty that we'll have to do it again is the worst.
HB3 would reduce local school operating taxes by 25 cents per $100 valuation in the upcoming school year and by another 4 cents the following year. It also would raise the homestead exemption, a special tax break for homeowners, by $7,500 if voters approve a related constitutional amendment.
The proposed cut would save the average homeowner in the Houston Independent School District about $225 in school taxes the first year. There would be no provision, however, requiring landlords to pass their property tax relief to renters, who make up most Houston residents.
To pay for the lost money, the House bill would increase the sales tax by three-quarters of a cent per dollar; expand the sales tax to auto repair labor, Internet access services and some computer goods and services; increase the cigarette tax by $1 per pack; and close loopholes in the corporate franchise tax.
According to the Legislative Budget Board, the property tax cuts provided in the bill would cost local districts about $6.6 billion over the next two years. The higher state taxes, if collections don't start until Nov. 1, would raise only $6.1 billion.
The higher state taxes would raise $6.7 billion — enough to cover the school tax reductions — if collections begin Sept. 1, the LBB estimated. But even then, the extra state taxes wouldn't keep pace with the property tax cuts for long.
Within five years, the deficit would be $1 billion or more, the LBB reported. That eventuality would force the Legislature to face the prospect of raising state taxes again when it meets in regular session in 2007.
So what's the point? Why are we bothering? This isn't a real tax cut, and it does nothing at all for the schools. If they insist on not considering any new approaches, then I say the hell with it. Wait for the Supremes to rule, be ready to override Perry if he re-vetoes the original school appropriations, declare sine die and go home.Posted by Charles Kuffner on July 26, 2005 to Budget ballyhoo | TrackBack