Back to news

1.12.2005
SENATE UNVEILS NEW SCHOOL FINANCE PLAN
Property taxes reduced by a third; franchise tax broadened

By Harvey Kronberg
www.quorumreport.com

Lt. Gov. David Dewhurst and all 31 state senators unveiled the basis of a school finance plan today that they say puts more money into public schools but does not increase net taxes.

The plan reduces school property taxes by one-third, with the current maintenance and operations tax replaced with a $1 maximum state property tax. It also promises teachers a pay raise that would take them to the national average.

Senators say the plan would increase publiceducation spending by more than ten percent, with an additional $6.7 billion in fiscal year 2006-07.

Dewhurst calculates that the total local school property tax reduction for homeowners and businesses would be $5.57 billion in fiscal year 2006. Local districts would be able to charge a 15 cent local enrichment tax, if voters approve, with a five cent phase-in each biennium.

The franchise tax would be revised and applied to all business entities except sole proprietors. Current loopholes would be closed, with the current rate cut by over one-half.

For fiscal year 2006, the senators calculate that the reformed franchise tax would bring in $3.5 billion, rising to $3.7 billion in 2007. Another $3.7 billion would come in for fiscal year 2006 from other potential revenue sources, such as sales tax, motor vehicle sales tax, tobacco and alcohol taxes. This would rise to $3.8 billion in 2007.

Senators believe additional school spending would be funded through "non-tax" revenue, such as closing loopholes, improved delinquent tax collections, TIF assessment, efficiencies and current revenue growth.

They said the $6.7 billion new money for public education would be reached through and Educational Excellence fund ($3.2 billion), enrollment growth ($1.7 billion), TRS Teacher Pass-Through ($0.3 billion), Textbooks ($0.4 billion), and Local Enrichment ($1.1 billion).


Copyright January 12, 2005 by Harvey Kronberg, www.quorumreport.com, All rights are reserved

Back to news