Off the Kuff Rotating Header Image

Fixing school finance, the neverending story

Work on dealing with the state’s revenue shortfall and what it will mean for the schools is already underway.

Senate Education Committee Chairwoman Florence Shapiro, co-chair of the 15-member panel, acknowledged that the funding system is in trouble and needs change – particularly with a massive revenue shortfall facing the Legislature when it convenes in nine months.

“The truth of the matter is there is no money,” the Plano Republican said.

She added that lawmakers are working with an “antiquated” system for financing education that has been in and out of legal trouble in the courts for several years.

“Rather than rearranging the chairs on the Titanic, which we have been doing all these years, why don’t we take them off the deck and look at things from a completely different perspective?” she told the committee, made up of eight House and Senate members and seven citizen appointees.

She asked for proposals for an entirely new system of funding schools. Currently, local school districts levy significant property taxes on homes and businesses, the state provides tens of billions of dollars in funding every year, and districts get a small amount of federal money.

If you really want proposals, there’s always a state income tax. It would better and fairer system in so many ways, not the least of which being that unlike property taxes, income taxes won’t go up beyond your ability to pay them. That isn’t going to happen so I won’t waste any more time on it. There’s also rolling back at least some of the unaffordable 2006 property tax cuts, and fixing the business margins tax to make it fairer. Do those two things and you can at least fill in the revenue hole that we dug back then, and most of these problems go away. Yeah, I know, it’s too easy.

What if you made property taxes a little more like income taxes? By that, I mean add in higher rates for properties valued above, say, a million dollars. Not for the whole thing, of course, but for the value of it above that level. Put in a bump at a million dollars, and another one at five million, and see how much that brings in. Maybe you can make the homestead exemption a little bigger as well, to ease the burden a bit for folks on the lower end. Assuming this passes constitutional muster – I have no idea if it would or wouldn’t, I’m just brainstorming like Sen. Shapiro asked – why not give it a try? Yes, I know the answer to that question, too. If you keep shooting these ideas down like that, we’re not going to get very far. Anyway, that’s my brilliant yet stupid idea for the day.

Alternately, there’s the Dan Patrick approach.

Patrick thinks Texas has to stop relying on property taxes, a move he sees as ultimately lethal to the state’s economy. He’s suggesting increasing the sales tax by 2 percentage points and eliminating some sales tax exemptions while reducing property taxes by 30 percent to 40 percent.

He estimates that someone who makes $60,000 a year would pay about $200 more a year in sales tax under his plan.

“I have not talked to a homeowner or a business owner that would not swap $200 a year more in sales tax for lower property tax,” he said.

Of course they would. They’d be paying less in taxes. But let’s be clear on what that means: Either Patrick’s proposed tax swap means a net decrease in revenue for schools, which isn’t going to help anything, or it means a higher tax burden on some other people. In particular, it means a higher tax burden on people who aren’t homeowners, or whose property taxes are already low. In other words, it would mean higher taxes mostly for poorer people. That will be the case even if Patrick’s proposal is a net tax cut, since obviously not everyone pays property taxes. We know from the last time the Lege proposed a property tax for sales tax swap that it meant a significant tax increase on the poorest Texans. And that was for a one cent rise in the sales tax – Patrick wants to double that increase. Any way you slice it, this is a great deal for a small number of people who don’t need the help, and a terrible deal for the vast majority of Texans.

Related Posts:

9 Comments

  1. jon boyd says:

    As you’ve suggested in previous posts, the state could mandate sales price disclosure of commercial real estate. This could be expanded to all real estate since many vacation homes are cash purchases. But recapturing revenue from large commercial properties would be the big plum.

  2. Ed Kless says:

    The real issue is not financing, but spending. I wholly agree that property taxes are flawed. We should move to funding through the state sales tax.

    That said, what is really needed is a voucher system. Let the money go with the child and let the parents decide where to send their kids.

    If elected to replace Senator Shapiro, I will attempt to do both of these.

  3. […] of interesting data in that post, so check it out. Broadly speaking, while I strongly oppose any sales tax increase, which is an incredibly regressive way method of taxation, I am okay with an expansion of the sales […]

  4. Teach says:

    If we wouldn’t spend so many millions of dollars on out-of-date textbooks (and debating which ones are best) and TONS of money on state and federal mandated testing, we would have more money to give to schools to use on curriculum improvements and more teachers. I don’t think the average person knows truly how much money is poured into textbooks and testing. If I had owned stock in Pearson (the state educational testing firm) when they got that contract, I would be a billionaire by now. The implementation of the STAR test (the next version of the TAKS) is another way to throw money down the drain. New testing paremeters require new curriculum parameters, plus new instructional plans, plus new teacher certification, etc., etc., etc. It’s a racket, and we, the average people, are sucked right in when we hear all of the negative propaganda about how bad our educational system is. Often, when we compare our student’s test scores to, say India’s student’s test scores, we don’t realize that they only test their top students–we test all of ours. “The 25% of India’s population with the highest IQ’s is greater than the total population of the US”…think on that factoid for a little while. (Did You Know 2008 Edition, Karl Fisch. Globalization & The Information Age)

    Teach

  5. […] The current budget shortfall projections are indeed that, projections. Those projections are based on what it will cost to fund what is in the current budget in the next budget cycle. But what Ogden is saying is that the shortfall is an opportunity for him and his party to finally do what they’ve been wanting to do for decades. That is to cut, draconian or not, what they see fit from our state’s budget if they are returned to office.  In this case it’s the much needed money for public education, the there’s no money lie that the Texas GOP is spreading. […]

  6. You give up on the state income tax too easily. Granted it is not a popular subject, until one realizes that the state could finally get completely out of property taxes while eliminating the structural budget deficit.

    By having it’s own progressive, revenue source the state could reduce it’s need for the regressive, sales tax and leave property taxes completely to the municipal, school district and county government agencies.

    Stephen M. Wyman
    Candidate for State Senate, district 5.

  7. […] Yeah, but who cares, right? I mean, that ginormous unaffordable property tax cut from 2006 isn’t gonna pay for itself. Everyone has to do their part to make Dan Patrick happy. […]

  8. […] can talk all you want about how good an investment this is, but if keeping Dan Patrick’s taxes low is a higher priority, then it’s all just talk. We could properly fund the TEXAS grants […]

  9. […] isn’t being said here is that Patrick would also cut property taxes by an equivalent amount. That would not only ensure that the schools remain perpetually underfunded, it would also give […]