Dan Branch
Member
May 13, 2004
Dan Branch is Budget
and Oversight Chairman of the Public Education Committee and a member of the
In track and field terms, the Legislature is on its third relay leg. After the House Select School Finance Committee ran the opening lap, passing a bill that would reduce property taxes by 30% and infuse 1.5 billion additional dollars into public schools, the Texas House stumbled.
As I wrote last week, in order to move the process forward, the House barely passed an emaciated, unbalanced bill that offered little new money for schools and very modest property tax reduction. For those reasons, and because HPISD's Robin Hood "recapture" rates would still exceed 60% under the plan, I was compelled to vote against the bill and the wishes of the House Republican leadership.
Now, we are on the third lap of the current special session. The Senate has the baton and is laying out a plan that achieves several important goals but also raises some concerns. As proposed by Senator Florence Shapiro of Plano, Chairman of the Education Committee, the plan would reduce property taxes by a third and put an additional $750 million into public education.
The Senate's plan would allow for 15 cents of "local enrichment" per $100 of property valuation, i.e., tax dollars raised by local districts that are not subject to recapture by the state. In addition, the plan includes a Cost of Education Index (CEI) that would annually account for the differences in costs among school districts. Located in a competitive job market, an urban district like HPISD stands to benefit from an updated CEI.
Unfortunately, the Senate proposal includes a statewide property tax. Despite its negative effect on local control and administration of education, some view a statewide property tax as the only way to do away with the current Robin Hood system.
A statewide
property tax does not eliminate Robin Hood; it makes the system permanent.
Instead of a portion of property taxes going to the state for redistribution,
all taxes would be confiscated by
In order to rein in Robin Hood, the Legislature must tap a significant, dependable revenue source other than ad valorem (property) taxes. Along with the Greater Dallas Chamber and the Dallas Citizens Council, I advocate reforming the existing franchise tax by lowering the current 4.5% rate, broadening the base and thus, making it more fair. Applying the franchise tax to a business entity's wage base and possibly other variables, rather than corporate and LLC net income, would generate enough revenue to significantly scale back Robin Hood.
As I've stated
in this column before, since businesses benefit the most from an educated
workforce, reforming the franchise tax would give all
The Legislature may ultimately opt for more moderate revenue sources like an increase in the sales tax rate, an expansion of the sales tax base, or an increase in the motor vehicle tax. Video lottery terminals would raise a projected $1.5 billion per year, but have not gained tremendous momentum in either legislative body. A constitutional amendment to legalize VLTs was defeated in the House last week and a prominent Senator has threatened to filibuster if the proposal lands in the Senate.
In the absence of a "big fix" like a broad-based, low-rate business tax that funds a majority of public education with state dollars, HPISD's best hope for significant Robin Hood relief is reduced recapture resulting from lower property taxes and the opportunity for unrecaptured local enrichment.
Before the Senate passes the baton to a "conference committee" of House and Senate leaders for the anchor leg, there is time to influence the process. Lt. Gov. Dewhurst (512-463-0001), Senator Shapiro (512-463-0108) and Senator John Carona (512-463-0116) will have a voice on the floor.
The current special
session's finish line is less than one week away. I hope the Senate will aim
for a long-term solution that puts