Texas School Funding Plan Not Reached

Jul. 18–AUSTIN — State lawmakers could not quit arguing Sunday about how to build a new school funding system — jeopardizing teacher pay raises, new money for textbooks, a property tax cut and a host of tax increases to pay for it.

Heated negotiations between the House and Senate were going down to the wire with three days left in the month-long special session last month.

One key senator used an airplane analogy to describe the impasse.

“The airplane is flying on empty right now. I hope we make it, but we don’t need any more head wind,” said state Sen. Steve Ogden, R-Bryan, author of a tax bill. ‘You don’t normally blow up when you run out of gas, but I guess you still crash.”

Officials say the session is teetering on the brink of failure over a couple of key issues. For example, the House plan would tax bottled water, something the Senate has resisted. And the Senate plan would raise alcohol taxes, but House negotiators say that idea is dead on arrival in their chamber.

Another major dividing line: how much property tax money a small number of super-wealthy districts, including Highland Park in Dallas, would keep under a system that relies more heavily on sales and business taxes.

House negotiators — led in part by state Rep. Dan Branch, R-Dallas, whose district includes Highland Park — have been advocating a formula that allows those districts to keep more of their property tax money than the Senate negotiators want, officials said.

“The issue is fairness, and the exorbitant tax rates in districts,” Branch said before going into a meeting with House Speaker Tom Craddick, R-Midland. The speaker said later that capping the amount that the wealthy districts have to give up for poorer ones is necessary to pass the legislation.

State Rep. Pete Gallego, D-Alpine, said the proposal would allow a few wealthy enclaves to spend more on their students than other districts — at lower property tax rates.

“All this leadership seems to be about is widening the gap between the haves and the have-nots in school finance, between the first-graders that have access to a good public school education, and a first-grader who doesn’t,” he said. “It’s all a matter of ZIP codes.”

Gov. Rick Perry called the special session in late June after school finance negotiations melted down in the waning days of the regular session, which ended May 30.

Texas legislators, under pressure to get the school finance system out of the state courts, have struggled for two years to find a new way to pump more money into education and dramatically restructure the taxes that fund it.

Both chambers have voted to give teachers a pay raise, lower property taxes and raise other levies. Both would close popular corporate tax loopholes, boost cigarette taxes by a dollar and raise the state sales tax.

But the devil is in the details, and now the two sides are trying to agree on a proposal that both chambers can pass and get to the governor before the clock runs out on the session Wednesday. Logistical hurdles, parliamentary rules and the threat of a Senate filibuster all become potential kill shots now that time is running short.

The tax negotiations appeared to be going well Sunday, but they broke down in the evening after the House sent senators what was described essentially as a final offer. That prompted an angry response from Ogden, the sponsor of the Senate tax bill. He compared the negotiating technique to sending proposals “by carrier pigeon,” and he demanded a public meeting on the plan. One was scheduled for 10 a.m. today.

“You don’t pass a tax bill by sending ultimatums back and forth,” Ogden said. “We’re not that far apart, but we’re not in agreement yet, and sending over that bill tends to sort of close off debate.”

Craddick disputed Ogden’s characterization and expressed confidence that lawmakers would strike a deal on the funding and tax reform issues.

“There shouldn’t be any finger-pointing. If we haven’t finished it, we’re down to the very end,” Craddick said. “I believe they’re going to come to agreement on both sides.”

The breakdown between the two chambers was remarkably similar to the failed negotiations in May. In both cases, the House drafted a written tax proposal and senators perceived it as a “take it or leave it” proposition.

State Rep. Jim Keffer, R-Eastland, chairman of the tax-writing Ways and Means Committee, acknowledged that the House proposal drafted Sunday night is “pretty close” to a final offer, but he said that was because of the razor-thin margin by which the tax bill passed the House.

“I feel like we know what will pass on the House floor,” Keffer said. “When you’ve got a one-vote margin, you don’t have a whole lot of deviation room.”

He noted, for example, that the House has repeatedly voted to reject higher alcohol taxes, and he said that was why the House negotiators stripped that from the bill.

Despite the heated disagreements over the tax details, the differences have narrowed significantly in the past few weeks. Negotiators have agreed on raising the state sales tax to 7 percent, up from its current 6.25 percent. The House had originally approved a higher sales tax — 7.25 percent.

They also agreed to give voters the final say on that increase. It would be authorized by a constitutional amendment that would also raise the homestead exemption by $7,500, meaning that Texans would not have to pay school property taxes on the first $22,500 of their home’s assessed value.

“We came down on the sales tax. We added the homestead exemption,” Keffer said. “We have come a long way.”

If the school finance bill goes down again, it could do more than ax the higher education funding and tax overhaul. Senate leaders say other legislation, including a telecommunications overhaul and judicial pay raises, will not be approved until school finance is resolved.

The governor could call another 30-day special session when this one ends. State Rep. Kent Grusendorf, R-Arlington, expressing hope that legislators can avoid that prospect by coming to an agreement, said he’s spent enough quality time in Austin.

“We really don’t want to be here the entire month of August,” Grusendorf said. “We’ve spent most of our summer in Austin. … Most of our colleagues would like to go home.”

–A bill limiting state and local governments’ power to take private property by eminent domain passed the House 138-2 Sunday. Senate Bill 62 is a response to a recent U.S. Supreme Court ruling that local governments may take land for private development to generate tax money.

The Senate, which approved a similar bill last week, can either accept the House’s changes and send it to Perry or try to work out a compromise bill with House members, which would then need approval by both houses before going to Perry.

The Associated Press contributed to this report.

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