Special Session Update
The Texas Legislature has adjourned from a special session and has successfully addressed the Supreme Court’s mandate to resolve the public school finance issue by June 1. I am proud to be a member of the Texas Legislature and proud of the job we did in providing comprehensive business tax reform while also delivering the largest property tax cut in our state’s history.
Our old franchise tax for business had loopholes that allowed some not to pay their fair share and forced others to unfairly carry the load while schools struggled and homeowners were forced to make up the difference with skyrocketing local property taxes. The new system – through a series of legislative initiatives – will change all of that.
Employers will benefit with a tax system that is fairer, broader and at a substantially lower rate than what we have today. Additionally, homeowners and other property owners will see a property tax reduction in their school property taxes by 33%.
Overview of The Special Session’s Tax and Education Reform
House Bills 1, 2, 3, 4 and 5 as a package make up these historic reforms which are summarized below.
School property taxes are mandated to go to $1.33 in 2007 and $1.00 in 2008, down from $1.50 now to a 33% decrease.
- All taxes from HB’s 3, 4 and 5 are dedicated by HB2 to property tax reduction.
- All the new taxes will only pay for about one-half of the cost of H.B.1.
- In a blow to larger government, future budget surplus will have to be used to buy down the $1.00 and hold the $1.00.
- In 2007/08 Biennium, $5.8 billion of the surplus funds / or budget cuts will be needed. In 2009/10 Biennium, $10.3 billion in surplus or budget cuts will be needed. It is now established in the law that any budget surplus will be used first to lower property taxes and not grow state government.
- By returning at least a portion of the existing surplus in the form of lower property tax rates, HB 1 keeps the school system out of court.
- This relief is direct and will be immediately felt by taxpayers in 2007.
- HB 2 cements the property tax relief in HB1 by creating the Property Tax Relief Fund.
- HB 1 provides for rollback elections to be held if school districts seek to raise their M&O rates by more than the permitted amount. Schools may only raise their tax rates four cents to $1.04 without voter approval. This is solid taxpayer protections.
Historic Public School Reform
In addition to reworking the public school finance system, the Texas Senate added some much-need educational reforms, accountability and a long-overdue pay raise for our hardworking teachers.
Among the initiatives to improve education:
- $2000 across the board pay raise for teachers and restoration of health insurance stipends for teachers.
- Increases financial transparency and accountability by requiring more detailed financial information and accountability for tax dollars spent on education.
- Texas will now lead the nation by creating the largest statewide teacher incentive program to provide over $360 million for excellence in the classroom rewarding teachers with performance bonuses of $3000 - $10,000. $100 million of these funds expands the Governor’s Educator Excellence Awards Program created by Executive Order last year.
- Provides millions of new dollars for teacher mentoring programs to support beginning educators and keep them in the classroom.
- Promotes greater student achievement by creating college readiness standards and allows each Texas student to earn 12 hours of college credit while still in high school.
- Raises standards for Texas students by requiring four years of math and science.
- Dramatically increases funding for Governor Perry’s High School Project by providing over $1 billion for high schools over three years.
- House Bill 1 provides a historic solution to the school funding problem.
- Permanent property tax reductions for Texas Taxpayers by $2.4 billion in the first year.
- Provides $1.5 billion in new funds this year for improving our schools.
- Establishes a “best practices” clearinghouse to promote school improvements and requires additional administrative efficiency for schools.
- Mitigates the old “Robin Hood” school financing method by reducing recapture payments to the state by over $400 million in 2007.
- Eases the college application process for students by creating electronic records transfer from high schools to colleges.
- Allows for flexible school days for students at-risk of dropping out to improve high school graduation rates.
- Creates Texas Governor’s Schools for promoting math and science, humanities and public policy through summer enrichment programs.
- Provides state paid pre-k programs for children of our active-duty military families and for the children of soldiers killed in the line of duty.
- Establishes a uniform school start date as the fourth Monday in August.
- Requires school board elections to be conducted with municipal elections to improve voter participation.
The Texas Legislature is now adjourned until January of 2007 or until a time they are called back by the Governor, whichever comes first. In the meantime, we will be studying the many issues that face Texas through the Interim Committee process. To view the Senate Interim Committee charges, or to view any of the legislation passed from this or other Legislative Sessions, you can go to: www.capitol.state.tx.us.
To contact Sen. Deuell about the legislative process, contact the Capitol Office at (512) 463-0102 or mail to Sen. Bob Deuell, Texas Senate, P.O. Box 12068, Austin, TX 78711. The website for the Texas Senate is www.Senate.state.tx.us. The e-mail address for Sen. Deuell is: firstname.lastname@example.org