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    A More Deliberate, Broader Review is in Order

    05/11/2003
    on 5/11/03.

    A Texas Senate plan to overhaul the "Robin Hood" school-finance system appears to be swimming against both time and tide, as the June 2 end of the legislative session looms.
    The plan being pushed by Lt. Gov. David Dewhurst is floundering in the House, where Speaker Tom Craddick, bolstered by Gov. Rick Perry, is angling for a special session to focus on school finance later this year or next.
    With so little time left and so many major pieces of legislation to work out in the waning session, the speaker's call for less haste and more deliberation is the better course. Particularly given the complexities, legalities and political sensitivities involved.
    The Senate voted 30-0 for its plan that would slash school property taxes by about $ 8 billion a year and recoup the lost revenue by increasing the state sales tax rate and expanding the sales tax to many services that are tax-exempt. If the House and Texas voters approved, the plan would replace local school taxes with a statewide property tax and cut the current $ 1.50 per $ 100 valuation cap for school operations to 75 cents.
    Critics say there's been too little time for debate and public understanding of the measure, and they have a point.
    In the meantime, Perry and Craddick are launching a $ 1 million study of school finance and other public education issues.
    Harrison Keller, the House speaker's senior policy analyst on education, said recently that the study will also take a broader look at the state's tax structure. That's a much-needed exercise that should be no-holds-barred and carefully consider all options, including the possibility of a state income tax.
    School finance has been much studied here in recent years, however, and the time for postponing reform is not limitless.
    Dewhurst deserves credit for showing leadership on the issue and stirring the pot that needs to be stirred. The Robin Hood school finance system faces legal challenges and is under deserved fire for allowing the state to shift ever more of the burden onto ever-rising local property taxes.
    But the Senate's proposed "tax swap" comes with a set of its own problems.
    It doesn't add sufficient new monies to the school system to cover the costs of rapid growth in the student population. Nor would it cover other anticipated increases in the cost of public education.
    If the rate of inflation were to return to 3 percent a year and the Legislature did not adjust state school funding for this inflation, says an analysis by the Center for Public Policy Priorities in Austin, "it would take a property poor school district under this plan about eight of the 10-cent local enrichment tax to make up the inflation in a single biennium, which puts our schools right back where they are now, capped out."
    A sales tax is one of the most regressive forms of taxation. The Senate plan would let thousands of low-income Texans who use the Lone Star Card to receive food stamps and other benefits to use their electronic card to get a 40 percent sales tax reduction. Owners of apartments would be required to pass much of their tax savings to renters. But many low-income Texans aren't eligible for the Lone Star Card, and the question of tax equity merits a much closer look.
    The idea of expanding the tax base in exchange for lower property taxes is appealing. But Massachusetts followed that route in 1990 and quickly repealed the measure out of concern for the impact it would have on the state's economy. Florida in 1987 also broadened its sales and use tax and shortly repealed it after the increase triggered protests.
    "Higher sales taxes and taxing services each have consequences that affect taxpayers, jobs and the state economy," said Peggy Venable, director in Austin of the Citizens for a Sound Economy group. "The Senate school tax plan, while well-intentioned, may have some devastating unintended consequences on the state's economy. Let's take a careful look at the Massachusetts and Florida experiences. Let's look before we leap."
    Furthermore, the House approach will allow an opportunity to look at cutting costs and gaining efficiencies, such as consolidating small school districts and/or decentralizing massive, bureaucratic districts.
    One other point. There are constitutional questions about the Senate legislation. The Texas Constitution says tax bills should originate in the House.