Analysis: A standard test for Texas lawmakers — fixing school finance

Texas Tribune News

Debate on House Bill 1, the House state budget bill, continues into its 12th hour as state Rep. Chris Turner, D-Grand Prairie, shows the strain of a long night on March 27, 2019.
Debate on House Bill 1, the House state budget bill, continues into its 12th hour as state Rep. Chris Turner, D-Grand Prairie, shows the strain of a long night on March 27, 2019.
Bob Daemmrich for the Texas Trib

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Fixing things that are supposed to be working is not the most rewarding thing in the world — at home or in politics. School finance is one of those things that’s supposed to work in the background, unnoticed, while the more rewarding things in government and politics are at center stage.

This year, the boring thing is at center stage. The interesting thing — over there to the side — is whether property taxes are going to fall. And the tension between the one that’s hard to fix and the one that’s politically rewarding to fix is growing.

The Texas House is about to dig into its school finance bill — House Bill 3 — a couple of hundred pages of complicated policy that includes $6.3 billion for public schools and $2.7 billion for property taxes. Lawmakers have proposed more than 90 amendments, and are at least prepped to argue about everything from teacher pay to test scores to school-financed water parks.

It’s just what the state’s public education experts want them to be talking about. But the politicians doing the arguing are worried about the relatively meager property tax cuts included in the bill; they’d bring the average homeowner less than $20 a month in tax cuts — maybe enough to notice, but not enough, they fear, to quench persistent voter anger about rising taxes on their homes and other properties.

A successful whack at property taxes would sell a lot of school finance, especially to price-sensitive conservatives who have been griping that efforts for property tax “reform” do not include enough — if any — “relief.”

The cuts are expensive, no matter which proposal you examine. The biggest would swap a one-penny increase in state sales taxes for a roughly 20-cent reduction in school property taxes. That would save a Texan owning a home with a taxable value of $250,000 about $500 a year. But it would raise the state’s part of the sales tax to 7.25% from 6.25%, and would still allow locals to add on up to 2% more — a total of 9.25%.

Would voters remember the tax cut, or the tax hike?

Another idea would end exemptions on current sales taxes, some of which — like the one for over-the-counter drugs, for instance — might get noticed. The Senate has talked about increasing homestead exemptions for property taxes by $10,000. That’s $100 per year per home. But it would divert $1.5 billion in severance taxes otherwise bound for the state’s rainy day fund, and business property owners wouldn’t get any break at all.

Even with the costs, proposals to cut property taxes are popular right now — at least as conversation fodder among lawmakers. They’re looking for something to brag about.

The school finance bill isn’t empty of political candy, but it’s decidedly wonky stuff. It is both an old joke and a true statement to say the system is so complicated that only a handful of people understand it — and none of them can explain it.

That said, changing the formulas could increase the state’s share of the cost of public education, estimated by the state comptroller at 36% of the total right now, and reduce pressure on property taxes. It could cut into the unpopular “Robin Hood” program that takes money from school districts with more valuable taxable property on behalf of districts with less. It could refashion outdated formulas for distributing education money to the kids who are most expensive to educate, whether because of special needs, language proficiency or other factors.

The authors argue that the bill will “compress” property tax rates, removing the state’s incentive to use local property tax increases as a way to lower its own spending on public education. The schools get more money right away. Before Wednesday’s scheduled vote, legislators were given the numbers for their local districts — allowing them to see how the statewide money would affect their schools.

What amounts to a counter-proposal from the Senate would use most of that school money in a different way, for across-the-board $5,000 annual raises for public school teachers and librarians. That has the advantage, perhaps, of a quick political reward. But it doesn’t leave much money to put public education spending back in balance.

That’s the deal: School finance is as inspiring as a broken refrigerator. Big, expensive, hard to fix, a pain in the neck when it’s broken and not a great source of entertainment when it’s working. It’s supposed to run in the background.

It’s certainly important. It’s just harder to sell than, say, a tax cut. Or a big pay raise.