Plan in Senate also has guaranteed funding hike for school districts

01:51 PM CDT on Wednesday, May 12, 2004

By TERRENCE STUTZ / The Dallas Morning News

Senate leaders on Tuesday outlined a proposed school finance formula that would be based on a new state property tax of $1 per $100 valuation and a guaranteed funding increase of at least 2 percent for all districts.

The plan also includes a reduction in school property taxes that would trim the average property tax bill about a third, or 50 cents off the current maximum rate of $1.50 for school operating expenses. The total property tax cut would be about $5.25 billion.

Sen. Florence Shapiro, R-Plano, laid out the funding formula for senators, who appear to be in no hurry to pass out their education finance package even as the current special session nears its conclusion on May 19.

Senators are expected to discuss their revenue options – including a new business franchise tax and legalization of video gambling machines – on Wednesday. Senate leaders also have looked at an increase in the state sales tax.

A key component of the funding formula presented by Ms. Shapiro on Tuesday is a new state property tax to replace the current local property tax for schools. A constitutional amendment authorizing the state property tax was filed in the Senate on Monday.

The rate would be capped at $1 per $100 valuation, with school districts allowed to add up to 5 cents more every two years up to a total of 15 cents for local enrichment programs. After five years, the maximum property tax rate in every district would be $1.15.

Ms. Shapiro said the plan envisions about $6 billion in new state funds, with $5.25 billion to offset the property tax cut and $750 million in new money for schools. The latter figure would guarantee that all school districts get a funding increase of at least 2 percent in the 2005-06 school year.

The Dallas school district, for example, would receive about $19.7 million in new money, or an extra $122 per student.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, filed one of four constitutional amendments affecting school funding that will be heard by his committee on Wednesday. Mr. Ogden's measure would authorize a state property tax of $1 per $100 valuation.

Supporters of the state property tax say it would make it easier to equalize the finance system because all school districts would receive similar amounts per pupil adjusted for enrollment and other factors such as the number of students in bilingual, compensatory and special education.

In addition, it would allow the Legislature to end "Robin Hood" sharing of property taxes by high-wealth districts.

But groups representing most school districts in Texas are strongly opposed to a state property tax, arguing it would undermine local control and make it difficult for districts to respond to needs.

Mr. Ogden said school districts are against the idea because it would take away their local taxing authority and deprive them of one of the key arguments in their current lawsuit against the state. That argument is that the current maximum $1.50 tax rate is functioning as a state property tax – now banned under the constitution.

"I'm not surprised school districts are opposed to this because it takes away their ability to sue the state," he said.

The senator said his constitutional amendment would let the people of Texas decide if they want a state property tax for schools.

"I support the notion of asking the people of Texas how they want to fund their schools," he explained. "This is an issue that should be decided by the people, not the school districts."

Mr. Ogden also said he does not sense "much concern" among school districts about whether property taxes are lowered .

"Their only concern is: 'We're out of money, and you need to give us more.' And that's a problem," he said.

The three other constitutional amendments that will be taken up by the finance committee would: reform the business franchise tax so that it affects most businesses in the state, legalize video gambling machines at existing dog and horse race tracks and on Indian lands, and cap property appraisal hikes at 5 percent a year.

Like the other 30 members of the Senate, Mr. Ogden said he has been talking to House members from his Senate district to find out what kind of school finance legislation might pass in the lower chamber. So far, the answer is unclear, he added.

"We're trying to find out if we pass a comprehensive plan here in the Senate, whether they would vote on it in the House or not," he said.

"That is the central issue right now, and I don't know when we're going to move off the dime," he said, noting the Senate is divided on whether to pass a school finance package now or "just run out the clock."

E-mail tstutz@dallasnews.com

Fixing education finance

Senate in no hurry to find funding solution ... Sen. Shapiro outlines plan for $1 statewide property tax, 2 percent funding increase for schools ... Finance chairman Ogden says voters, not school districts, should decide on statewide tax

Senate expects to discuss franchise tax, gambling, other revenue options

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