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April 18, 2006     (512) 463-0300

SENATE FINANCE COMMITTEE TO CONSIDER PROPERTY TAX CONSTITUTIONAL AMENDMENT

Senator Steve Ogden (SD-5) and Lieutenant Governor David Dewhurst

Lt. Governor David Dewhurst and Senate Finance Chairman Steve Ogden today discussed proposals for constitutional amendments that would set a uniform rate for property taxes in the state, cap property taxes at $1.15 per $100 valuation, and cap property appraisal increases at 5 percent. The Supreme Court ruled in October that the current property tax system in Texas represents a statewide property tax, which is unconstitutional. Because nearly all school districts are already levying property taxes at the capped rate of $1.50 per $100, districts lack meaningful discretion in setting their tax rates, said the court. Ogden's amendments would address this ruling by constitutionally enshrining the state's right to set a uniform property tax rate.

Ogden asserted today that the only way the state can permanently lower property taxes and repair the state's ailing school finance system is by using a constitutional amendment. "We cannot permanently fix public school finance and all the constitutional questions that surround it without a constitutional amendment," said Ogden. "All of this discussion around the Sharp plan, or the Perry plan, or buying down the surplus doesn't effectively address, for the long term, the constitutional issues that we've been litigating for a generation. A constitutional amendment would."

Ogden expressed concern that any funding mechanism that comes from statute would result in the state finding itself back in the same position at some point in the future: with all districts levying the same tax rate and the state facing another court ruling about the lack of meaningful discretion for local districts.

Another motivation behind these proposed amendments is to create a permanent reduction in property taxes paid by Texans, said Ogden. "The other problem we have is that you aren't assuring Texans that we are permanently lowering property tax," he said. "One of the complaints that I've heard repeatedly in our previous failed special sessions is that this is basically some kind of legislative trick, that you're going to temporarily lower property taxes in order to impose upon us a new state business tax. Before five years from now, property taxes are going right back up to where they use to be…and we'll end up with a bunch of new taxes." His proposed amendments, said Ogden, would attempt to address that complaint.

Senator Ogden discusses potential effects of a constitutional amendment he proposed.

State law requires that any constitutional amendment approved by the Legislature must be approved by the voters before it can be added to the document. This rule, said Ogden, would give Texans the chance to weigh in on the issue of property taxes and appraisal rates, and would ensure voters that the decrease would be made permanent.

The Senate Finance Committee will consider these amendments at a meeting held Wednesday, April 19, at 9:30 a.m.

Lt. Governor Dewhurst said today that he is seeing increased support among the Senate for the tax plan proposed by the governor's Tax Reform Commission, headed by former state senator and comptroller John Sharp. This plan would lower property taxes to $1 per $100 over the next two years and cap property taxes at $1.30. It would also introduce a gross-receipts tax of one percent on businesses that earn more than $300,000 annually.

By the same token, said Dewhurst, the House is showing increased support for the Senate's education reform plan, Senate Bill 1, filed by Education Committee Chair Florence Shapiro on Tuesday. Shapiro's plan would give teachers an across the board base pay increase of $2,000, would provide incentive pay for teachers who teach in needed subjects or understaffed districts, and would increase financial and academic accountability for the state's schools. SB1 will be before the Education Committee on Thursday.

The Senate will reconvene Thursday, April 20, at 11 a.m.

Session video and all other webcast recordings can be accessed from the Senate website's audio and video archive pages.

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