Gov. Greg Abbott has thrown his weight behind the idea being pushed by an influential conservative think tank. Many school leaders are worried. govabbott tx kprc2 click2hou
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That the debate has sparked such contention among Republican leaders who are usually aligned in their anti-tax views shows how complicated the art of funding schools is in Texas. While property taxes are unpopular in Texas, the alternatives — such as sales tax or income tax — don’t have much support, either.
Each individual district has its own M&O tax rate. But state law requires districts to have access to essentially equal funding on a per-student basis. That’s where the state steps in. The property values in each district vary widely — from the downtown towers and expensive homes in Austin ISD to rural districts with few commercial properties like Boles Independent School District in North Texas.
In 2006, lawmakers cut schools’ M&O taxes by a third and sought to replace that revenue from the state’s franchise tax, tobacco taxes and motor vehicle sales taxes. Those new sources didn’t bring in as much revenue as expected, however. And the Great Recession soon followed, forcing the state to cut $5.3 billion from schools in 2011. Districts had to increase class sizes, cut essential programs, reduce bus routes and cut staff to keep the lights on.
“Tax compression is about lowering tax rates as property values increase, with the goal that taxpayers will see lower — or at least stabilized — tax bills,” said Mary Lynn Pruneda, who oversaw school finance policy for the governor when that bill was passed and now serves as public education finance adviser for the advocacy group Texas 2036. “In 2019, the Legislature paired a tax rate buydown with a structural change that would automatically compress tax rates over time as values rose.
“I haven’t heard anybody talking seriously about increasing a tax to replace the property tax,” Heflin said. “It’s just using the surplus, and that’s a much easier sell.” At the heart of Patrick’s argument: Eliminating school property taxes is unrealistic without a substantial increase in the sales tax.
“There’s a lot of attention being paid to [eliminating school taxes] right now,” he said. “Anytime you are removing the decision-making power from the local authority — in this case, school boards — and replacing that with state authority, that's a concern. Our state is not designed to operate like that. And yet, that's what seems to be happening.”
Because his large district spent 87% of its money on teachers and other staff, human resources was the only place to make meaningful cuts — which they did through attrition, trimming staff by what he estimated was between 5% to 7%.
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