April 26, 2006
Where we stand after Monday

In writing about what I think of the legislative action on Monday, I'm going to start with a long quote from Rep. Garnet Coleman, which I take from this useful Capitol Annex post that gives an overview of how everyone voted on everything.

I oppose CSHB 1 because, at this point in the process, I cannot support legislation that only addresses property tax reduction and does nothing to improve our children’s schools. If, at a later date in the session, a bill is presented to this legislature that would increase our state’s investment in public education, I will support CSHB 1 or its equivalent.

I support property tax reduction and recognize that it is a worthy policy goal. Obviously, we must address the issue of an unconstitutional property tax system in order to comply with the supreme court ruling. Although CSHB 1 addresses the property tax issue, my constituents and a majority of Texans believe we are in special session to increase the state’s investment in our public schools because that is their highest priority.

Unfortunately, instead of placing equal importance on property tax cuts and our children’s schools, CSHB 1 fails to provide a single additional dollar for our public education. Even worse, CSHB 1 would actually take money away from Texas schoolchildren by deleting a rider that was intended to provide $1.8 billion in new money for our public schools. Additionally, CSHB 1 would make it more difficult for local school districts to raise funds for local enrichment. It also establishes unsound budget policy by requiring a property tax reduction without a corresponding funding source to cover the cost of the cut - a move that could certainly lead to an increase in the state sales tax and other consumption taxes that are disproportionately harmful to my constituents.

I stand ready to vote for a school finance solution that would provide both meaningful school property tax reduction and increased investment in our children’s schools. CSHB 1 fails that test, and for the foregoing reasons, I must oppose it. - Coleman

The problem with Monday's votes is pretty neatly summed up by Matt, and it reiterates what Coleman is saying. It's not that this special session has done nothing to fix school finance - as that is not yet on the call, we knew going into the session that it would wait, perhaps till next year. It's that thanks to HB2, nothing that comes out of this session, or any other barring a change, will do anything to fix school finance. Whatever the merits of the TTRC plan are, it was sold to the public as a way to put school finance on more solid footing, while also providing for property tax relief. You'll get the latter, but not the former, not now and not in the future. That's what HB2 did.

It's possible we'll eventually get some money thrown at the schools this session. The Senate is already talking about adding a teacher pay raise plus some other miscellaneous spending to their version of HB1. That would come out of the existing surplus. Any future salary increases for teachers, or other extra money to pay for things like the continued rapid growth in enrollment, will have to come from somewhere other than the new business tax. I suppose we should all start hoping that Brooke Rollins is a visionary and not a hack, because we're going to need endless surpluses from here on out.

One of the things that this suggests to me is that we may wind up revisiting the issue of adequacy a lot sooner than perhaps the State Supreme Court thought we would. How can you claim that the system will be adequate when you're enshrining in law a cap on how much revenue for schools there can be? Any new money that the TTRC plan generates goes to buying down property taxes, period. Where's the mechanism to keep up with enrollment growth, let alone state and federal mandates or the need to educate in an increasingly complex and technology-oriented world? The more affluent school districts will have the option of raising their school taxes a few more pennies to make up any shortfall they perceive. The less so will be right back where they started, unable to keep up. Do we really want to go through this again so soon?

I don't necessarily agree with his conclusion about HB3 equaling an income tax, but Rep. Gary Elkins, no one's idea of a tax-and-spend type, gets this right (also quoting from that Capitol Annex post from above):

Many supporters of HB3 have argued that this new tax actually reflects a tax shift, shifting the tax burden from property owners to businesses that are currently not paying the franchise tax. I agree that this bill creates a tax shift, not a shift from property owners to businesses, but a shift from big business to thousands of small businesses. The governor’s own policy advisor has informed members of the house that the average small service sector business will pay more in taxes and in most cases double, triple, or even quadruple what they are currently paying under the current franchise tax system.

This new tax is bad public policy and is harmful to most of our small businesses. More importantly, my constituents can see through this subterfuge and recognize this tax to be what it actually is, a state income tax. For the cited
reasons, I must respectfully oppose this measure. - Elkins

Yep, it's a tax shift. Perry and Craddick tried and failed to swap sales taxes for property taxes last year, and this year they succeeded with the TTRC tax. Anyone want to guess where the inevitable shortfall for school finance will be made up down the line? I'll give you a hint: it rhymes with "Tales Max".

At this point, all I can do is hope that the Senate changes directions, and that either causes everything to fall apart or somehow, miraculously, Lt. Gov. Dewhurst doesn't get taken to the woodshed by Craddick again. (I suppose one bright spot in all this is that it's given In the Pink the opportunity to quote from Meg Ryan movies again.) Maybe a little pressure can be applied to some of the wayward Dems for when these bills come up for final votes. All I can say right now is that given a choice between HBs 2 and 3, and the Get Out Of Dodge plan, I'd have picked the former as the lesser evil. At least then when we did have to start all over again, we wouldn't be doing so from a worse position than we're in now.

Finally, on a not-really-related note, I have to recognize State Rep. Joaquin Castro for pulling off this stunt. How that made it through is a mystery to me. I suppose anything really can happen during those long Legislative nights. Nicely played, sir.

Posted by Charles Kuffner on April 26, 2006 to Budget ballyhoo | TrackBack