School, tax deals called ‘touchdown’
AUSTIN — Declaring victory akin to winning the Super Bowl, Gov. Greg Abbott and leaders of the Texas House and Senate on Thursday unveiled a plan they say will solve Texas’s biggest problems by boosting education spending by $4.5 billion and allocating $5 billion to tamp down property tax bills starting next year.
Republicans Abbott, House Speaker Dennis Bonnen and Lt. Gov. Dan Patrick said they struck a deal on Wednesday night that will lower school property tax rates by an average of 8 cents per $100 in home value in 2020 and by 13 cents in 2021. For the owner of a $200,000 home, that would amount to a decrease of about $160 in 2020.
But the GOP leaders have yet to reveal the details or text of the plan, and provided few details about where the funding would come from or how each of the roughly 1,200 school districts across Texas will fare. While teachers could see a raise — especially those who have spent at least six years in the classroom — the exact amount will be left up
to each school district and could include merit and incentive pay, they said.
“I said we will do what no one thought possible: We will finally fix school finance in Texas,” Abbott said. “And today, I’m proud to tell you, we are announcing that we have done just that.”
Patrick added, “We said we were on the 5-yard line about a month ago. Now we have a touchdown, we have had the Super Bowl of legislative sessions in the history of the state.”
Attempts to ease skyrocketing property taxes and improve school funding have vexed the Legislature for years, leading to a meltdown in the Capitol in 2017 and several lawsuits, making the issues even more difficult to solve.
The legislation still needs the approval of the Republican-led House and Senate before the legislative session ends Monday.
Roughly $2 billion of the $4.5 billion for education would be earmarked for boosting compensation for teachers, nurses, counselors and librarians
“There’s flexibility,” said Rep. Dan Huberty, a Houston Republican who chairs the House public education committee. “We’ve created a lot of really cool things in the plan. If you’re a smart superintendent, you’re a smart school board, you will figure out ways to take advantage of it.”
Patrick said they are also offering teachers the opportunity for incentive pay for those “who want to be involved in different programs,” such as teaching for an extra month in July.
The plan funds full-day pre-K for low-income students, creates the first dyslexia identification program in Texas history and establishes a “do not hire” registry, a list that would help administrators determine if a person should or should not be hired based on prior sexual misconduct. The state would send more money to schools with higher concentrations of under-served students including dropouts and students in special education. The plan also increases the base amount of money the state spends per student by more than $1,000 to $6,160.
‘Everybody wins’
Huberty and Rep. Mary Gonzalez, a Democrat from Clint who helped negotiate the deal, said all school districts in Texas will get a benefit. “Everybody wins,” Huberty said.
While advocates for children said they were pleased the state will provide full-day pre-K, teachers groups said they are disappointed lawmakers won’t spread raises to all school employees.
“According to these three state leaders, there is more money earmarked for property tax relief than for public school children, a disappointing misplacement of priorities given the extreme needs of our schools,” read a statement from the Texas chapter of the American Federation of Teachers.
Annie Spillman, Texas director at the National Federation of Independent Business, said the plan is a win for small businesses.
“We’re at a point now where property taxes in Texas are rising faster than people’s incomes. That affects everybody, but it can be devastating for small businesses,” she said in a statement. “We need meaningful reforms that ease the property tax burden on Texans and make it easier for small businesses to expand and create jobs.”
Not only does Texas have the third-highest property tax rate for single-family homes in the country, but the state is lagging in the number of students reading on grade level by third grade and ready for college when they graduate high school.
“When these kids are reading better, they’re going to do everything better,” said Sen. Larry Taylor, a Friendswood Republican and the Senate’s chief negotiator. “The whole thing is about moving our kids up. Because right now, with the change in demographics we’re facing, we’re not getting those kids up to the level they need to be to be getting those good jobs and have great careers. And this is all about getting those kids those opportunities.”
In Houston ISD, the state’s largest school district, administrators cautioned they cannot forecast the bill’s impact until they see more details.
District officials expect Houston ISD will benefit from reforms that shrink “recapture,” which cost the district about $275 million in lost property tax revenues in 2018-19. Recapture is the state’s method of redistributing local property tax revenues from property-wealthy districts to poorer ones.
“I’m not going to say (recapture) is going to be zero, because I haven’t read the 300-page bill, but it appears it’s going to be less than what we expected it to be under current law,” Houston ISD CFO Rene Barajas said.
District officials also remain unsure about how much Houston ISD will be required to spend on costs mandated by the state, including teacher raises, and how much money will be available for discretionary spending.
Some school districts, including Houston ISD, are legally required to pass their 2019-2020 budgets by the end of June, leaving insufficient time to craft spending plans for the upcoming fiscal year. As a result, Houston ISD administrators are recommending the district’s school board pass a $2.1-billion budget based on current law – with no employee pay raises and a 5-percent increase in health insurance premiums – and amend the budget in August or September once the bill’s impact is known.
“It’s going to take us several weeks, if not a month and a half, to figure out what it means for HISD,” Barajas said.
2.5 percent cap
Abbott, Bonnen and Patrick agreed to make school finance and property tax reform priorities at the start of the session, although the three didn’t always see eye to eye. Patrick prioritized a $5,000 across-the-board pay raise for Texas teachers and librarians, while the House favored a more modest pay bump for all district employees and giving schools discretion to divvy up extra money for teacher raises.
To address escalating property taxes, the Legislature seems poised to lower the cap on what cities and counties can raise each year from property owners without first having an election. The threshold would drop from 8 to 3.5 percent under lawmakers’ plans.
School districts — which make up the bulk of property owners’ tax bills — would be limited to a 2.5 percent cap without holding an election, they said.
“That’s a dramatic cut in future tax increases,” Patrick said.
Patrick said those caps ensure that Texas homeowners who have been seeing property tax bills grow 6, 7 and 8 percent a year will now have a say in the taxes their local governments collect “in a way they have never had.”
Lawmakers are running out of time to vet the proposal. The Legislature has until Sunday to approve the approximately bill, although many said they had yet to see it on Thursday.
Lawmakers failed to broker similar, yet smaller deals reforming school funding and property taxes in 2017. Those plans failed in the final days of that Legislative session and again in a special session called by the governor that summer.
Rep. Trey Martinez Fischer, DSan Antonio, said he is concerned about how the state will pay for this plan in the long term and is eager to see how school districts in his area will fare.
“I want to be cautiously optimistic, but of course any time there’s a massive proposal coming down the pipeline with about 48 hours of legislative life left in the session, I think everybody’s guard is going to be up, everybody’s alert system is going to be functioning because at the end of the day this proposal impacts 5.4 million children in the school system and we don’t have a lot of room for error,” he said.