Despite receiving what seems to be a final offer from the House, the Senate said today it will continue negotiations in an effort to come up with a plan to increase funding for schools while reducing property taxes. Yesterday, the House submitted to the Senate versions of House Bills 2 and 3 which were largely the same as the versions originally passed out of the House last March. Lt. Governor David Dewhurst said that the Senate wants to keep communications open, but that they will not accept a plan that shifts taxes from businesses to, as he put it, "hard-working families." "We said we wanted to dramatically improve public education, that we wanted to put more resources in the class room, pay our teachers more, raise standards, increase accountability, and lower school property taxes," said Dewhurst. "We said we'd work with the House, but we'd never be involved in a take-it-or-leave-it that wasn't good for Texas consumers."

Both chambers agreed to a plan that reduced school district property taxes by 40 cents per $100 valuation over the next two years. The cornerstone of the Senate plan was the closing of the Delaware Sub and Geoffery loopholes that allow five out of six businesses to avoid paying franchise taxes. Dewhurst said that the bill the House sent over last night actually increases these loopholes, and shifts about $1 billion from businesses to consumers. The House plan also includes a one cent sales tax increase, twice as much as the Senate's plan.

Senator Steve Ogden, who chairs the Senate Finance committee, said he is committed to keep the process working, but any final agreement must meet certain standards. "It's still possible to make a deal, but the deal has to meet these three criteria: Its got to be tied to HB 2, its got to close the business tax loopholes in the franchise tax, and it cannot raise the sales tax more than one-half cent," he said. "And as soon as I catch my breath, I'll go back in there and work this out."

Time is certainly running out on negotiations for these two bills. Because HB 3 is a tax bill, according to Senate rules it must lay out for 48 hours before it can be debated on the floor. As midnight Sunday is the final deadline for consideration of conference committee reports, the Senate would have to suspend this rule in order to consider HB 3, which would require a two-thirds vote. It would be unlikely that Senators would support such a suspension on any bill that raises sales tax by more than one-half cent. But Dewhurst says that the Senate is not ready to give up just yet. "I think the Senate is united in wanting to reach an agreement on school reform and lowering property taxes," he said. "We are really close, especially on HB 2. We want to reach an agreement, we think its in the best interest of our school children, school teachers, homeowners and businesses."

Also today, the Senate approved the final version of the state budget, which came out of conference committee last night. The bill would appropriate more than $139 billion in all funds over the next two years, which represents a 10 percent increase over the 2004-2005 biennium. State Troopers would get a pay raise under this budget, along with other state employees, and more money is earmarked for higher education and protective services. Once the House signs off on the budget, the appropriations bill goes to the governor's desk for final approval.

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