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April 19, 2004     (512) 463-0300

Governor Addresses School Finance Committee

AUSTIN - Governor Rick Perry told the Joint Select Committee on Public School Finance today that his plan for property tax relief is the best way to reform the tax system. He pointed to a three billion dollar tax decrease and increased funding for Texas schools as the primary example of this. He called his proposed property tax cap a vital part of the plan in that all together it would rid the state of the so-called Robin Hood funding plan, which currently takes tax dollars from wealthy school districts for redistribution to poorer parts of the state.

The committee was meeting today, April 19, 2004, to examine the governor's plan and hear expert testimony on how it could affect the state's schools and business environment. A number of panels appeared before the members, the first regarding how effective incentive-based education funding plans might be. Dr. Shirley Neeley, Texas Education Agency Commissioner, led off this invited testimony. She described statewide improvements in student achievement at certain grade levels and told the members that the "public schools of Texas should be the schools for all Texas children." Dr. Neeley also felt that incentives would ensure that children will perform at a higher level.

Gayle Fallon, from the Houston Federation of Teachers, said that one problem with incentive-based pay is that some teachers are, by exclusion, singled out as inadequate when they may simply have students who were behind academically at the beginning of the school year. He said that base salaries are so low that half of teachers in Houston leave by the end of the fifth year. Tom Luce, of Just for the Kids, said that incentives do work and that certain incentives exist in the Texas Education Code today.

Lonnie Hollingsworth from the Texas Classroom Teachers Association said that while the governor's plan had many good points and did not undo earlier reforms that shrank class size. However, Hollingsworth said that if a plan replaces local property taxes with other money, then there has to be other tax sources that will grow along with the number of students. Dr. Catherine Clark, from the Texas Association of School Boards, echoed this, saying school districts needed additional funding to educate an increasing student population.

How the governor's proposals could affect the state's tax base is another concern. The next panel included Bill Allaway, President of the Texas Taxpayers and Research Association. He said the Legislature should be careful of any plan that shifts a higher burden of property tax onto business, since Texas already relies on that tax for school funding. Bill Hammond from the Texas Association of Business said Texas businesses already pay more than half of the property taxes, well above the national average, and that additional taxes would hurt job creation. Mike Toomey, Governor Perry's Chief of Staff, explained the more technical parts of the governor's proposal and how funding would change in coming years.

The committee discussed whether a cap on homestead taxes means a shift toward businesses as the primary source of property taxes. Paul Bettencourt, the Harris County Tax Assessor, said that over the past 20 years, the homeowner's share of the state's property tax burden has risen from 30 percent to 40 percent. He recommended reducing the homeowner's tax burden before anything else. Former Texas Senator Mike Moncrief, now Mayor of Fort Worth, testified that the governor's tax cap which was called a "miniscule tax cut" would mean that Fort Worth would lose vital services such as police, fire, and libraries, while "failing to provide any meaningful tax relief." Mayor Robert Cluck of Arlington said the governor's proposal is not a cap on taxes, it's a cap on services and that services from the public safety sector will be cut.

Ensuring that each Texas child gets equivalent funding has also been a hot issue. Robert Scott, from the Texas Education Agency, briefed the committee on a recent Supreme Court decision that said while equity was a vital part of the system, it does not require the state spend exactly the same money on each student. Clayton Downing, from the Texas School Coalition, was concerned that if tax revenues were capped, the state might not have enough revenue to pay off previously sold bonds. Brad Shields from the Texas Smokestack School Coalition, said that the Legislature has pitted rich and poor school districts against each other, while the state's share of the total education bill continued to shrink. Scott McCown, former judge and Executive Director of the Center for Public Policy Priorities, said the problem with the governor's plan is that the ends "Robin Hood" while not ensuring equity in funding between school districts. And as far an incentives for teachers are concerned, McCown said you have to take into consideration what kind of students the teachers are given when their performance is measured.

Today the committee was to examine revenue options as well as job creation and the overall economic climate of Texas. Public testimony followed the invited witnesses.

The Joint Select Committee on Public School Finance is Co-chaired by Senator Florence Shapiro and Representative Kent Grusendorf. Members from the Legislature include Senators Eddie Lucio, Steve Ogden, Todd Staples and Leticia Van de Putte as well as Representatives Talmadge Heflin, Fred Hill, Vilma Luna, Ken Marchant and Ron Wilson. Public Members include Carolyn Bacon, Caroline Hoxby, Jack Ladd and Don McAdams. The committee recessed subject to call of the chair.

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