For months the state’s elected leaders have been touting a plan to overhaul the state’s school finance system. However, so far what lawmakers have proposed largely doubles down on the broken portions of the system—including Robin Hood. And in order to pay for what’s becoming an increasingly expensive spending spree, Senate Republicans are floating a one-penny increase to the state’s sales tax.
Earlier this session, the Texas House passed its version of “reform” in House Bill 3— a plan that keeps Robin Hood the same size, increases funding to both schools and teacher retirement, and provides for a 4-cent compression in the school maintenance & operation tax.
Despite the bill providing more pain than relief for taxpayers, only one lawmaker, State Rep. Jonathan Stickland (R–Bedford), voted against that legislation in the Texas House.
But now it’s the Texas Senate’s turn to take a bite of the apple.
Thursday morning, Senate Education Committee Chairman Larry Taylor (R–Friendswood) laid out a significantly amended version of House Bill 3. The committee heard testimony on SB 4 and HB 3 simultaneously.
“We’re not planning on voting this out until next week, if not the later part of next week,” Taylor said as he laid out the bill.
In short, Taylor’s amended legislation provides a $5,000 across-the-board pay increase to Texas teachers and librarians, while providing a smaller increase in the basic allotment provided to each school district. It also implements an “Educator Effectiveness Program”—a merit pay proposal that mimics a program piloted by Dallas Independent School District in rewarding the most effective teachers and incentivizing them to stay at the most challenging campuses with the greatest need.
The property tax relief comes from increasing the homestead exemption on school districts’ maintenance and operations property taxes from $25,000 to $40,000 and making districts whole with state dollars.
But it comes at a cost. The homestead exemption is conditional on voter approval of the 1-cent sales tax increase.
It’s that portion of the legislation that State Sen. Paul Bettencourt (R–Houston) took issue with, arguing that lawmakers already have enough revenue to pay for a homestead exemption without necessitating a sales tax swap.
“We’ve never had a swap that worked,” said Bettencourt.
Bettencourt’s alternative would pay for the 4-cent reduction in school district tax rates by using $4.5 billion of the $9 billion surplus budgeted for the maintenance and operations buydown. He would also increase the homestead exemption $10,000 to $35,000 using existing severance tax revenues.
I have concerns with the 1 cent sales tax increase… I will provide an alternative because we have never had a tax swap that has worked. The results over time will not be net neutral but instead they will be net positive. #txlege #txed pic.twitter.com/s7KHABdWyW
— Team Bettencourt (@TeamBettencourt) April 25, 2019
“When you sum all of this together … this totals $10.3 billion. And I submit that $10.3 billion can solve a lot of problems and can do it without the sales tax swap,” said Bettencourt. “So, with that, I just submit that, at this time, with an additional $10 billion plus on the table, I’m not sure why we need an additional 5 or 6 billion [from the proposed sales tax increase]. And thank you for your patience.”
Bettencourt last week in a radio interview suggested that the Texas Senate may not have the votes necessary to pass a sales tax increase not equating to a dollar-for-dollar swap that is dedicated to property tax relief.
However, that was only hypothetically speaking. The bill at hand is House Joint Resolution 3 by State Rep. Dan Huberty (R–Humble) and provides for only an 80-20 swap. Eighty percent of the money raised is dedicated to buying down property taxes, and 20 percent goes towards new education spending.
The legislation would need the approval of two-thirds of the Texas House and Senate before heading to Gov. Greg Abbott’s desk, and it would also have to be voted for by Texans on a November ballot in order to be adopted.
Lt. Gov. Dan Patrick came out shortly after Bettencourt’s remarks in the Education Committee to distance himself from his longtime ally. The move placed him at odds with Bettencourt and squarely in support of the sales tax increase with House Speaker Dennis Bonnen and Abbott.
.@GovAbbott, @RepDennisBonnen and I have agreed to consider a sales tax swap to buy down property taxes. The Senate is looking at all revenues sources to reduce property taxes, including a sales tax swap. @TeamBettencourt’s comments in opposition to a sales tax are his own.
— Office of the Lieutenant Governor Dan Patrick (@LtGovTX) April 25, 2019
The committee will continue to hear testimony on HB 3 and SB 4 into next week, when they are expected to vote an amended version or committee substitute with correcting and member-offered changes to the full body.
The House, in contrast, is purportedly waiting as long as possible to allow the Senate to finalize consideration of the bills on school finance reform before considering House Bill 2, property tax reform legislation, which was delayed for a third time on Wednesday by House Ways and Means Committee Chairman State Rep. Dustin Burrows (R–Lubbock).
With the issues of school finance reform and property tax reform and relief coupled so closely in both chambers—in addition to the new sales tax increase having a largely uncertain future—citizens will have to keep a close watch on their legislators through the remainder of the legislative session.
You can watch the full exchange between Chairmen Bettencourt and Taylor below: