Grading Texas

Hurricane Harvey did more than destroy homes and schools. It also wiped out billions of dollars in taxable property values and made it even more urgent for the Legislature to begin work on drafting a new school finance system.

Harvey compounded the problem—exacerbated the folly, you could say – of the state letting local property taxpayers assume an increasing share of public education costs, while the state’s share has slipped well below half. Now, the school finance fix that Speaker Joe Straus and the House majority tried to begin addressing and the Senate rejected twice this year (during the regular and special sessions) will be more expensive.

It also will be more necessary than ever.

According to some estimates, Harvey wiped out between $3 billion and $4 billion in property tax values that has been helping to prop up the school finance system. It may not be necessary to address the issue in a special session, but it is time for the Legislature to begin drafting a plan now so an adequate, equitable and workable school finance solution can be enacted during the next regular session in 2019.

Once again, Straus and the House are likely to take the lead on this issue. Straus already has directed the House Public Education Committee to study the financial implications of Harvey on schools and the potential punitive consequences of STAAR testing and the state’s accountability system on impacted districts and displaced students. The committee is expected to begin its work with a meeting in a couple of weeks.

Incidentally, according to media reports, Public Education Chairman Dan Huberty suffered about $50,000 in damages to his Houston-area home during the storm.

“Harvey has changed everything,” Straus said during a interview over the weekend at the Texas Tribune Festival.

But has it changed the hearts and attitudes of Gov. Greg Abbott and Lt. Gov. Dan Patrick? They have been two of the biggest obstacles to a school finance overhaul, preferring to let local taxes continue to rise with property values while shedding crocodile tears for the people who pay them. The only effective way to lower local property taxes is to increase state funding for schools.

Over the weekend, Patrick sent a political email with photos of him and Senate Education Chairman Larry Taylor joining other volunteers helping stricken homeowners with cleanup and repair efforts. The email also included a plea for more volunteers and admitted the “massive” job of recovery was “just beginning.”

“That ‘Texas Strong’ spirit is needed now more than ever,” Patrick said.

A strong, can-do spirit of volunteerism is great, but it isn’t enough. As lieutenant governor and leader of the Senate, Patrick can do much more to help Texans recover from Harvey. He has endorsed tapping into the Rainy Day Fund to help with hurricane recovery. But he also needs to quit being an obstacle to creating a long-term system of adequate and equitable funding of critical public services, including Texas public schools – in the storm area and elsewhere.

It is encouraging that Gov. Greg Abbott has appointed John Sharp to be his hurricane czar, the person who will be responsible for overseeing the huge task of rebuilding Texas from the ravages of Hurricane Harvey.

Sharp is an experienced government policymaker with a reputation as a doer, not an ideologue or bombastic tweeter. He has had a long career as Legislative Budget Board examiner, legislator, Railroad Commissioner, state comptroller and now Texas A&M chancellor. Sharp also was an architect of our current, inadequate school funding system, although the ultimate failure isn’t his fault.

Sharp chaired a task force appointed by Gov. Rick Perry, his one-time political rival, that proposed the tax plan that the Legislature enacted in 2006 to temporarily lower school property taxes and replace the old state franchise tax with the under-performing margins tax as a new source of revenue for schools and other state programs.

This alleged “swap” allowed Perry to brag about “cutting” property taxes, even though the reductions were transitory and were soon wiped out as taxes continued to rise with increasing property values. The new margins tax never was intended to generate as much revenue as the franchise tax, and it has performed even worse than expected.

From the day the margins tax was enacted, business people have continuously whined about it, and the Legislature has responded with a series of cuts. This year, the legislative majority went so far as to order an eventual phaseout of the margins tax without approving a source of revenue to replace it.

Meanwhile, school property taxes continue to increase as state funding for public education continues to decline and schools remain underfunded. These include schools in Harvey’s path that now face huge recovery challenges compounded by enormous losses to their property tax bases.

https://www.texastribune.org/2017/09/06/abbott-selects-sharp-lead-harvey-rebuilding-effort/