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Another look at the case for HISD recapture

Dale Craymer taps the brakes on the vote-NO-on-recapture train.

BagOfMoney

Houston Independent School District voters face an unhappy choice this November – vote “YES” or “FOR” on Proposition 1 to authorize the state to recapture roughly $160 million of the school district’s property taxes or just vote “NO” or “AGAINST.”

It seems like a no-brainer. School board members, several other local officials and the Houston Chronicle editorial board are urging a “NO” vote, as a way to protest a state school finance system commonly referred to as “Robin Hood.”

What folks aren’t being told, though, is that a “NO” vote is a “YES” vote for higher taxes.

[…]

Folks advocating for a “NO” vote contend taxpayers have nothing to fear. The vote will “blow up” the school finance system and force the Legislature to “fix” it.

That may be a bad bet.

The Legislature has no good options. They could raise spending so that all districts get as much money as Houston. But lawmakers have no money and would have to raise $8 billion in new taxes – clearly a fantasy given a fiscally conservative Legislature, and an option most Houston and other voters statewide wouldn’t like.

Lawmakers could make a special provision and allow Houston to keep the money while all other districts go wanting. That would be a bad vote for those five out of every six lawmakers who don’t represent Houston, and could threaten the constitutionality of the current system.

Craymer calculates the tax increase, due to having a smaller base on which to repay bond debt, as $50 annually for a house with a $300K appraisal. Gotta say, that doesn’t sound too terrifying to me, though that value will increase over time and could impinge on future bond issues. Mostly, I agree with his assessment that it’s an extreme longshot to believe that the Lege will take meaningful action.

Even with all that, Craymer does not really endorse a Yes vote on recapture, he just wants to make sure everyone is informed about what it means before they vote. Daniel Williams pushes back on some of Craymer’s assertions, and goes deeper into the weeds.

If the proposition passes the money paid to the state goes to the general fund. In theory the lege is supposed to then move those funds over to finance under-financed schools – but there’s no guarantee that will happen and the lege has a long history of playing shell games with money in the general fund. If the prop does not match the reassigned property taxes go directly to other school districts, not through the general fund. The reassigned properties would be subject to the tax rates of the reassigned districts so those properties would likely wind up paying higher property taxes.

This, to my mind, is the very best argument for “no.” Even under the worst case scenario a “no” vote means more money for schools – maybe not Houston schools – but schools all the same.

Also, while it very likely that the lege is going to rework the system HISD may have a different course of action under the new process. If they are locked into buying attendance credits by a ballot initiative it may be difficult for them to legally get out of it.

Some have argued that a “no” vote is a dangerous game of chicken. That the legislature just doesn’t have any options to increase funding. Let’s dispose of this fiction: they could close the excise tax loophole, they could index the gas tax, they could stop letting WalMart keep a portion of the sales tax, they could tap the rainy day fund (that’s why it’s there), they could repeal the tax break for yachts they recently created, the list goes on.

Now, you might say that these options are not politically viable – and you’d be right. The current mess is what we keep voting for. The three biggest expenses in the state budget are education, public health and transportation. This is what we vote for when we elect people who say they’re going to “cut taxes” – cuts to education, public health and transportation. If we’re going to change that it has to start at the ballot box. So, vote “no” on the HISD question, but only if you’ll also stop voting for Austin-bound candidates who say they’ll cut taxes.

Daniel agrees there’s no good answer, but a No vote keeps some options open. I agree with that, and I strongly agree that if you’re going to vote No, you also need to vote No to politicians who refuse to address the underlying problems with the system. If you want a fix, do what is needed to get one.

UPDATE: Leah Binkovitz of the Kinder Institute weighs in, including some words of wisdom from former Rep. Scott Hochberg, one of the very few people in the state who actually understands the school finance system. Hochberg does not agree with a No vote on the recapture issue, which should give anyone pause.

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2 Comments

  1. Kenneth Fair says:

    What a disaster. I have no idea which way to vote on this, and there are people I respect each side of the issue.

    Why oh why can’t we have a Legislature that doesn’t suck?

  2. Chandra Villanueva says:

    There is a lot of misinformation out there on what the recapture provisions in our school finance system are really about.

    In Edgewood I (the first state level challenge to the school finance system), property wealthy districts were able to generate 9 times as much revenue as property poor districts. The state supreme court found the system to be inequitable in that case. Chapter 41/recapture is the mechanism designed to reduce equity gaps between districts. And it has. In the latest ruling the supreme court cited that the equity gap ratio decreased to 1.34 because of recapture, and found the system to be equitable enough.

    HISD’s real concern, which is shared by nearly all districts in the state, is the underfunding of the system. The pressure should be focused on what’s not working (low basic allotment, inadequate weights, lack of full-day PreK funding) and not on what is working (recapture).

    Attacks on recapture will only make an underfunded system even more unfair.