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Thursday, April 4, 2002
Ratliff proposes a $1.40 school tax
Statewide levy would equalize school funding
By Monica Wolfson
   AUSTIN - Lt. Gov. Bill Ratliff on Wednesday proposed abolishing local authority to levy school property taxes in return for a $1.40 statewide property tax that would equalize school funding.
   Under Ratliff's plan, about 400 property poor school districts would receive $115 more per student per year than they do now, but 84 property wealthy school districts would have less money to spend. Included in the 84 school districts are Austwell-Tivoli, Santa Gertrudis and Port Aransas independent school districts.The plan is revenue neutral for the rest of the 1,040 school districts.
   And for taxpayers living in about 100 school districts where the tax rate is below $1.25, Ratliff's plan could be a big hit to the wallet.
   Ratliff's four-point plan is an effort to stabilize equal school funding and get rid of Robin Hood, the current school equity funding formula that requires property wealthy school districts to send tax money to the state to redistribute to property poor school districts.
   Some lawmakers criticized Ratliff's plan, suggesting that it still doesn't solve the school-funding problem in Texas.
   The key components to Ratliff's plan, which he revealed to the Joint Select Committee on Public School Finance Wednesday, are:

Levy a $1.40 statewide property tax.

Allow local school districts to raise - with voter approval - up to a 10 cent "local enrichment" property tax. School districts with property valued at less than $300,000 per student will get state aid up to that level.

Guarantee state aid for debt service on education facilities.

Possibly raise the statewide property tax above $1.40 to fully fund a state paid teachers' health insurance plan that is currently available to state employees.

The plan leaves in place locally raised property taxes that cover debt service.
   Ratliff's proposal requires a constitutional amendment, which means that two-thirds of the Legislature has to approve the plan and then the majority of voters must support it at the ballot box.
   "Until now I was reluctant to present any suggestion to this committee because I did not want to stifle any of the members' creative juices," said Ratliff, R-Mount Pleasant. "By doing so today, I earnestly appeal to you to give this suggestion no more weight than any other suggestion. I hope you will dissect it and determine its weaknesses, applying the same scrutiny with which you study other proposals put forward."
   No room for expenses
   Critics argued that while Ratliff's plan guarantees equity, it doesn't address the fact that the school funding system lacks capacity or room to grow to cover additional annual expenses.
   Committee co-chairman Paul Sadler, D-Henderson, said unless the revenue stream was tied to student population growth, the Legislature will be scraping for dollars or raising property taxes every two years under Ratliff's plan.
   "The concern of educators is no longer equity but capacity," state Sen. Teel Bivins, R-Amarillo, said. "If this just keeps us where we are, how do we answer those educators?"
   Ratliff said his plan doesn't address raising new revenue.
   "I don't think you ever get away from the fact that every time we come down here, they want more money into the school system," Ratliff said.
   "If property values continue to rise as they have in the past few years, it adds $500 million per year to revenues. We will never get away from grappling with where the rest of the money comes from. Whether it's more sales tax, property taxes, income tax, franchise taxes ... that won't change."
   Choosing a tax
   State Rep. Todd Smith, R-Euless, said the plan only increases the state's reliance on property taxes, which are among the highest in the country.
   Ratliff said that if the Legislature wants to lower property taxes, it must find money from another source. But when Ratliff asked what that source would be, no one answered.
   Lawmakers doubted whether they could convince voters to give up local control over school property taxes. Ratliff said that losing local control would scare some voters, but there was a bigger downside looming on the horizon if they didn't approve it.
   Given a choice between an income tax or a statewide property tax, Ratliff said he believes voters will overwhelmingly choose the statewide property tax.

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