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Texas Senate
April 3, 2002
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Joint School Finance Committee Examines the Tax System

The Joint Select Committee on Public School Finance continued an examination of alternative tax plans today, Wednesday, April 3, 2002. Today's testimony included a review of the current tax system from the Comptroller's office and new proposals from Lieutenant Governor Bill Ratliff.

James Lebas from the Comptroller's office began by examining how taxes in Texas compare to other states. He said that not surprisingly, Texas sales taxes are among the highest in the country, but that when all taxes are averaged, the entire tax burden is still relatively low. The problem that Co-chairman Paul Sadler pointed out is that the current property tax does not grow with the state's population. Consequently, it is not a good source of funding. Other questions centered around how the property tax affects Texas families.

Lieutenant Governor Bill Ratliff followed with some new ideas on how the property tax could be administered. Ratliff proposed eliminating local school property taxes altogether, and replacing them with a simplified statewide property tax of $1.40 per hundred dollar valuation. Instead of going to local districts, property taxes would go directly to the state, which would then distribute the funds back to the local districts. Ratliff said that previous suggestions to the committee seemed to be just revisions of the current plan, which is less than popular with school districts, many of which under the current plan have to send part of their tax dollars back to the state. The local taxes would be abolished and statewide property tax instituted through a constitutional amendment. Under this plan, local school districts could also levy an additional tax of no more than ten cents per hundred dollar valuation for other local programs. Ratliff also said that as long as local property taxes are part of the funding and all Texas schools are required to provide an equal education for students statewide, the current problems will continue.

After the presentation from the Lieutenant Governor, Chairman Paul Sadler and committee member Mark Stiles were to make a presentation reviewing the implementation of HB 4 from 1997, relating to residence homestead school property tax exemptions and tax limitations, allocating and dedicating certain state funds for education, limiting the increase in school property tax rates, and providing for certain additional revenue.

Committee Co-chairs are Senator Teel Bivins and Representative Paul Sadler. Members include Senators Steve Ogden, Florence Shapiro, Eliot Shapleigh, Leticia Van de Putte and Royce West. Also on the committee are Representatives Harold Dutton, Kent Grusendorf, Scott Hochberg, Rene Oliveria and Todd Smith. Public members include Kent Caperton, Will Davis, Craig Foster, Lyndon Olson, Mark Stiles and David Thompson. The committee recessed subject to the call of the chair.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.