Texas Lawmakers Wrestle With Tax-Reform Efforts

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Texas lawmakers are debating a pair of tax-reform bills that would radically restructure school funding in order to lower school property taxes, one of Republican Gov. George W. Bush's long-time goals.

But state teachers' union officials say neither of the competing plans should be passed because both fail to raise salaries for teachers.

By a 10-1 vote last week, a select Senate tax committee passed a finance plan that would cut average property-tax rates by 17 cents for every $100 of assessed value. The state share of school spending would rise under the plan from 47 percent to 53 percent, thanks to revenue from new taxes on tobacco, manufacturing equipment, and other items.

The House passed a vastly different package last month. It would lop 60 cents from every $100 of value on residences and raise $3.8 million in new business taxes to hike the state share of school funding to 80 percent.

Both plans would further equalize current, per-pupil funding levels. "There's no new significant investment, but a restructuring of funding," said Joe Wisnoski, the Texas Education Agency's coordinator of school finance.

The full Senate was expected to take up its bill late last week. A House-Senate conference committee could begin work this week on a final plan. Texas legislators are scheduled to recess early next month.

Mr. Bush has not signaled which plan he favors. He has applauded both chambers, however, for seeking property-tax relief. Some school groups are less sanguine.

Teachers Upset

"At this point, we don't support either one because neither one supports teachers' salaries," said Richard Kouri, the president of the Texas State Teachers Association. "They freeze salaries at current levels."

The TSTA joined the Texas Federation of Teachers in a May 6 news conference to denounce both plans.

The groups blasted provisions that would suspend a 1995 legislative provision that guarantees teacher salary increases in direct proportion to boosts in the state share of school aid.

"We see both bills as a slap in the face for doing away with the 'escalator clause,'" Robert Nash, the spokesman for the TFT, said in referring to the pay-raise guarantee.

Texas teachers averaged $31,633 in annual pay in 1995-96, which ranks the Lone Star state 36th nationally in teacher salaries.

Lawmakers remain a long way from finishing their work on the bills. In the Senate alone last week, members had prepared 60 amendments to their bill. Reconciling the finished products in the House and Senate will be a challenge.

The more dramatic House bill would require voters to amend the state constitution to cap local school property taxes at 75 cents per $100 of assessed value on residential property. Currently, the average property-tax rate in the state is $1.29 per $100 of value. The Senate plan offers much less of a savings, but would require no constitutional vote on property-tax rates.

The House plan also would end Texas' so-called "Robin Hood" school funding formula that diverts tax proceeds from well-to-do districts to poor districts.

The Senate plan keeps the formula, but would raise the threshold for per-student wealth so that fewer districts would export tax dollars.

Uncertainty for Schools

But businesses are crying foul over the House plan to raise the state share of K-12 funding to 80 percent. The bill would pay for that shift by closing business-tax loopholes.

There is a catch for schools, as well.

The bill would create a state property tax on businesses of $1.05 per $100 of value. And that would limit the fund-raising ability of local districts, which now may levy taxes on business property.

"School districts would no longer have the flexibility to respond to local expectations and state mandates," said Craig Foster, the executive director of the Austin-based Equity Center, an advocacy group for low-property-wealth districts. The group favors the Senate tax-reform plan for its flexibility, but also because it portends fewer sweeping, and confusing, changes than the House bill.

School groups worry about the numerous pieces of the House plan that would change funding formulas for most education programs.

"School administrators are concerned that the House bill is a complete overhaul. It's hard to determine the winners and losers," said Stan Paz, the superintendent of the 64,300-student El Paso schools and the president of the Texas Association of School Administrators.

"No one knows how to view it," Mr. Paz added.

Rep. Paul Sadler, the Democratic architect of the House bill, defended the plan. He said it would guarantee long-term funding equity--something that Texas schools have struggled for through years of school finance litigation.

He sees the Senate plan as a short-term solution at best.

The House bill "is the first significant step toward providing a long-term solution for public education," he wrote in a constituent letter.

"In supporting the bill, 93 of my colleagues joined me in declaring public education as a 'Texas priority,' " he said.

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