With the Texas House's approval of school finance reform bills, the issue now passes to the Senate, which will spend the month of April focusing on education reform, intending to put its own bill on the floor by the beginning of May.
Last week, Senate leaders discussed probable changes to the House's legislation, which aims to lower property taxes by a third and fix what state District Judge John Dietz called an "unconstitutional" school finance system in September 2004.
To replace part of the $5.4 billion lost from reducing the property tax, senators are looking to raise the state sales tax from 6.25 percent to 6.75 percent, half the increase approved by the House, said Sen. Florence Shapiro, R-Plano, chairwoman of the Senate Education Committee.
The House plan also calls for an expansion of the sales tax to include bottled water, billboard advertising and car repairs, a measure the Senate plan leaves out. But Shapiro said the Senate does intend to increase the motor vehicle sales tax.
The 3 percent snack tax the House plan calls for will be left out of the Senate's legislation, but senators will probably follow the House's lead and increase the cigarette tax, said Shapiro. The House plan calls for a $1.01 increase, making the total tax $1.41 - the 10th highest in the nation, up from the 41st highest.
Lt. Gov. David Dewhurst and some senators have said they would consider an increase in the alcohol tax not included in the House's plan.
Among the more highly favored measures included in the House plan is a reform of the franchise tax that five out of every six businesses currently avoid paying. Dewhurst said the Senate plan will also aim to close the loopholes inherent in the franchise tax and attempt to capture the taxes lost through the current system.
Perhaps the most controversial element of the Senate's plan is a measure that would seek to create a state-wide property tax in lieu of a local one. In last September's ruling, Dietz said the local property taxes amounted to a de facto state-wide property tax, which the Texas Constitution prohibits. Putting one in place would require amending the constitution with a two-thirds vote in both chambers as well as majority voter approval.
"The most equity can be ensured through a state-wide property tax," said Dewhurst.
House Speaker Tom Craddick, R-Midland, has said he would like to see a state-wide tax, but that he is skeptical about whether the measure would be approved.
The Senate plan calls for more money to be put into the school system than the House plan does. It also provides more local discretion in setting property tax rates, which could be raised 15 cents per $100 in property value over six years, pending local voter approval. The House plan allows for a 10-cent increase over five years, but voters would have to approve each 2-cent annual increase.
A late addition to the House bill would give teachers an average salary increase of $2,500, but has left teacher groups and Democrats wondering if the money to fund the increase is actually available. Shapiro said she wants to give every teacher a raise instead of requiring average raises.
A conference committee made up of a handful of lawmakers from both chambers will sort through the differences in the plans before sending the bills back to each chamber.
The Senate Finance Committee is currently working on the appropriations bill, which they are expected to complete by the Easter break. Shapiro said the Senate Education Committee will use the following week to review the work of House Bill 2. Hearings will be held at the beginning of April to craft the Senate's own proposal, and a week of hearings over the proposal will follow, putting the Senate bill on the floor as early as April 21 but by the first week of May at the latest, depending on the progress on the House bills.
The district court's decision over school finance is currently being appealed by the state to the Texas Supreme Court and is expected to be reworded, if not thrown out, according to Republican leadership. In a measure passed by the House late last Monday, lawmakers amended House Bill 3, the property-tax reduction side of school finance reform, so that any future challenge to the Texas school finance system would go directly to the Supreme Court.
"It seems to be a very deliberate effort to try to get at least part of the school finance litigation out of district court," said state Rep. Jim Dunnam, D-Waco. "They don't like the results they've been receiving there."
The Associated Press contributed to this report.
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