Committee of the Whole Senate Approves Overhaul of School Finance System

Senator Florence Shapiro celebrated doubly on May 2: she laid out SB 2, SJR 1, and HB 5 to the Committee of the Whole as Chairman of the Senate Education Committee, and she was also presented yellow roses for her birthday.

Austin - The Senate met as a Committee of the Whole today to consider legislation that would overhaul Texas' school finance system. The current system is often referred to as Robin Hood because of a recapture provision that redistributes tax revenues from property-rich school districts to poorer districts.

Houston Senator John Whitmire presided over the chamber, while Lieutenant Governor David Dewhurst sat at Whitmire's desk. The Committee of the Whole operates under committee rules, instead of stricter session rules.

Speaking about his proposals for public school finance, Lt. Governor David Dewhurst said, "I believe that, in my bones, this is the right time for this bill and for Texas."

Dewhurst said that the Senate's committee substitute to Senate Bill (SB) 2, which will replace House Bill (HB) 5, is good for our taxpayers, good for business, and, most importantly, good for students. He called this an opportunity for the Senate to do something that Texans have wanted for years: to broaden the base of funding for public education so that, over time, more funds can be provided and local property taxes, which he said have been such a burden on home owners and businesses, lowered.

Plano Senator Florence Shapiro, Chair of the Senate Education Committee, presented the proposed legislation that she said "moves forward in meeting our collective laudable goal of decreasing local property taxes, eliminating Robin Hood, and expanding the state's responsibility for public education." She outlined the main provisions of the bill during the committee.

"Under this bill, Robin Hood, as we know it, is dead," said Shapiro, who said that this legislation would replace the current system of recapture. The proposed Committee Substitute to Senate Joint Resolution (CSSJR) 1 would create a proposed constitutional amendment that would create the Texas Education Fund, which she called "the most equitable system this state has ever known." This would be a dedicated fund to finance public education that would distribute dollars equally, guaranteeing virtually the same state spending per pupil in all areas of the state, and provide much needed relief for school districts.

Although property taxes would still be used to finance public education, property taxpayers would still be provided with relief. Under the proposed legislation, the property tax rate would be cut in half, from a $1.50 state ad valorem tax to a constitutional cap of 75 cents. The legislation would expand the sales tax to services, which are currently excluded, to generate additional revenue for the fund. Medical services would be exempted from taxation.

CSSJR 1 would also increase the state sales tax rate to 7.25 percent and the motor vehicle sales tax rate to 8.75 percent.

Other revenue dedicated to the Texas Education Fund would include distributions from the Available School Fund.

Another key component of the proposed legislation is the creation of a Public Education Enrichment Tax. This would give school districts meaningful discretion in which to allow voters to approve of an additional ten cents of local enrichment tax on property to fund programs in excess of the basic program funded by the state.

The legislation also provides for the establishment of a Blue Ribbon Task Force, which would look at the issue of adequacy in education and study how to provide every Texas student with a thorough and efficient education.

Shapiro assured the members that the legislation would guarantee that no school district will receive less money than it would under today's system. If the legislation is passed, $621 million in new money will be received by Texas public schools.

Renters will also benefit from the legislation because mandatory residential tenant property relief would be included as a provision. Landlords would be required to rebate or credit tenants for 75 percent of the tax savings they receive.

Shapiro and Dewhurst both pointed out that the neediest of Texans, the poor, will not be harmed. Lone Star card holders would receive a 40 percent sales tax exemption on their purchases.

According to Dewhurst, the proposed school finance legislation would provide for over $8 billion dollars of total benefit to Texas property owners and to Texas schools.

The Senate will reconvene Monday, May 5, 2003, at 11:00 a.m.

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