tax relief

Will anything be left for schools?

 

Acknowledging the obvious, state Sen. Robert Nichols told the Austin American-Statesman, “We can delay the construction of a road or bridge a year or two, but kids have to go to school every day.”

But as chairman of the Senate Transportation Committee, Nichols’ first priority is roads, not schools. And, that is why he is sponsoring legislation, which may win Senate approval next week, to dedicate a big chunk of revenue from the state’s sales tax on cars and trucks to highway construction and maintenance. At present, all of that money – about $4 billion a year and growing – is available for spending on education and other needs.

Within a few years, Nichols’ proposal would help the state start reducing a large backlog of needed transportation projects, but it also would significantly reduce the amount of tax revenue – by billions of dollars each budget cycle — available for spending on education and other  needs.

I appreciate good roads and highways as much as most drivers. But why should Nichols’ plan be put on the fast track while public schools – whose needs are no less critical than highways – are still waiting in line? And, a separate decision to make tax cuts the top budget priority, even ahead of highways, puts even more funding off limits before even considering what is needed for public education.

Almost everybody, from the new governor on down, says they want to improve education, and a state judge has declared the school finance system inadequate, unfair and unconstitutional.  But instead of addressing that ruling, the state is appealing that decision, while available revenue that could be used to start building a reliable school funding system for all of Texas’ school children is being committed to other causes.

Kids are still going to school every day, many in overcrowded, under-funded classrooms.

“We have got to deal with the major problems of this state before we commit to tax cuts,” Sen. Kevin Eltife of Tyler said in a recent interview with The Texas Tribune.

But, so far, Lt. Gov. Dan Patrick’s demand for tax cuts — $4.6 billion worth in a Senate proposal – is mostly drowning everyone else out. Patrick also is backing Nichols’ highway funding plan.

“At the end of the day, the Texas economy stays strong if people have more money in their pocket, if businesses have more money to create jobs,” Patrick said.

But what kind of jobs will they be? The quality of those jobs and the future of our economy will depend on the state’s investment in public education, not tax cuts.

 

 

The debate should be about school funding, not tax cuts

 

The several billion dollars in new revenue that the state’s strong economy has generated offers the Legislature a great opportunity, but even before the session convenes that opportunity already is in jeopardy.

Leaders who want to move Texas forward would use the money, or at least part of it, to increase the state’s investment in education and other critical services without raising anyone’s taxes. The two top state leaders who were elected last week, however, seem poised to keep Texas in neutral – or drive it into a ditch – by limiting the debate to tax cuts.

Lt. Gov.-elect Dan Patrick is promising to cut both local property taxes and the state’s main business tax, the so-called margins tax, both major sources of revenue for public education. Some legislators already have pre-filed bills to abolish the margins tax by phasing it out. Gov.-elect Greg Abbott is being more cautious but has indicated he will support cuts in either or both taxes because he also is placing a priority on “tax relief.” The goal, Abbott said, is to generate job creation.

The single biggest job creator, however, is education. So, what about school relief? Relief from things like crowded classrooms, rising health care premiums for educators, below-average teacher salaries and cutbacks in pre-K and other critical programs? There has been nothing but silence from Abbott and Patrick on those concerns.

The margins tax was engineered by Gov. Rick Perry as part of a partial tradeoff for lower school property taxes back in 2006. Its under-performance as a revenue-raiser contributed to the financial emergency that resulted in the legislative majority cutting $5.4 billion from public school budgets in 2011. But many businesses, particularly professional and service-oriented companies, resent the margins tax because it slapped them with tax bills they didn’t have to pay under the old franchise tax.

These businesses are pushing for significant cuts in or an outright repeal of the margins tax, even though repealing the tax would cost state government almost $5 billion a year in revenue, according to an article in The Dallas Morning News this week. That loss would dig deeply into the state’s anticipated surplus.

One notable exception to the attack on the margins tax is the Texas Association of Manufacturers, which represents property-heavy industries that prefer the margins tax to the former franchise tax because they paid more taxes under the franchise tax. This group, instead, is pushing for reductions in the property tax.

The best way to reduce local property taxes is for the state to increase its share of education funding. In essence, though, the tax-reduction debate being promoted by Patrick and Abbott has become a debate over greed within the business community, boiling down to how each individual industry believes it can benefit from specific tax cuts.

Lost in this debate is the future of Texas’ public schools. Texas spends less on public education per student than most states, and it is spending less per child now than it did before the 2011 budget cuts, even though enrollment continues to grow by 80,000 students a year.

The future of Texas schools will determine the future of Texas, including the future of the business community. School districts should not be forced to continue cutting corners when state government is enjoying a multi-billion-dollar surplus, both in general revenue and in the Rainy Day Fund.

A state district judge has ruled the school finance system inadequate, unfair and unconstitutional, and the state has the resources to fix it – now. But politicians who are driven by ideology, such as Patrick and Abbott, don’t want to have that conversation. Neither do business leaders who are eager to sacrifice the quality of their future employment pools in exchange for some short-sighted tax cuts.

 

Which is the biggest emergency: education or tax relief?

 

Now that Gov. Perry has manufactured a new use – tax relief – for the Rainy Day Fund, you can be sure his special interest political supporters will be all over themselves trying to get their hands on it. Technically, the constitution allows spending Rainy Day money for anything the Legislature decides to spend it on, including tax relief. But I say “manufacture” because the voters of Texas, when they approved the Rainy Day Fund more than 20 years ago, didn’t have tax relief in mind. They approved it as a savings account to be used to help state government bridge temporary, financial emergencies.

The governor and his allies in the legislative majority started trying to redefine the fund two years ago, when trying to explain why they left several billion dollars of taxpayer money sitting in it while inflicting $5.4 billion in cuts on public schools. The savings account should be reserved for hurricanes or other natural disasters, Perry claimed, while presiding over the biggest political disaster to befall Texas’ public schools in his lifetime.

Now, the fund has a balance approaching $12 billion, and Perry isn’t talking about hurricanes anymore. But he still intends to shut out the school children. He wants to use $3.7 billion from the fund to begin playing catch-up on highway and water needs and $840 million to help pay for about $1.8 billion in tax relief. Perry has indicated that at least part of his proposed tax relief would be to ease the business burden of the under-performing franchise tax. In other words, the franchise tax, which already falls several billion dollars short of meeting the schools’ needs each budget cycle, would contribute even less.

The Texas Association of Business, one of Perry’s biggest political supporters, already has its hand out for the lion’s share of any tax reductions. This is the same group that claims to be a strong supporter of education but has not said a word about restoring school funding, even though its members have much to gain from strong public schools. The business group’s leadership, instead, is more interested in imposing standardized tests on children than in repairing the damage to classrooms.

If you believe a quality education is more than a test score, and if you want the Legislature to restore the school budget cuts, you have to tell your own legislators. The money is there. In addition to the Rainy Day Fund, the Legislature is operating with a general revenue surplus of $8.8 billion. Combined, that is enough to meet the governor’s priorities, meet other pressing needs and repair education funding – now.

There is no need to wait for a final ruling in the school finance lawsuit, which is at least a year away, although that is a favorite excuse of some legislators who don’t want to do the right thing. Make sure your state representative and your state senator hear from you. If you don’t know who they are, click on this link, http://www.fyi.legis.state.tx.us/Home.aspx.

Then type in your address, and you will get their names and contact information. Let them hear from you – early and often. You can bet they will be hearing a lot from the “tax relief” crowd.