By J. Lyn Carl, GalleryWatch.com
Austin, TX – "I've heard some say that all bipartisan bridges have been burned," said Gov. Rick Perry as he laid out his proposed Educational Excellence and Property Tax Relief plan today before the Joint Committee on Public School Finance. "If that's the case, I suggest we break out the shovels and build a new bridge."
Perry urged lawmakers to work together in the Fourth Called Session that begins Tuesday to solve the state's longtime unsuccessful efforts to solve its public school finance problems, and urged support for his own proposal.
He called his proposal a "roadmap" to meaningful property tax relief, increased funding for public education and greater equity among schools, saying it is a "fiscally disciplined approach based on conservative principles."
Saying that his proposal is not "the only way" to solve the school finance conundrum, the governor said that although it may not be the "perfect way" to approach the problem, he believes it is "the best way."
Perry cited the major provisions of his plan as being:
- Reduces property taxes by $3.2 billion
- Increases funding for public education by $2.5 billion, continuing the $1.2 billion appropriated during the last legislative session for a total of $3.7 billion new dollars
- As part of that $2.5 billion, provides $1 billion in performance incentives to focus schools on excellence.
- "Puts the brakes" on skyrocketing appraisals and attacks the problem of "taxation by valuation"
- Protects the state's job climate and ensures that the state's "improving yet fragile" economy starts to take off
- Offers the legislature the opportunity "to once and for all rid this state of the Robin Hood funding scheme" while making funding even more equitable - with 98 percent of students being in an equalized system
Perry noted there appears to be some concern regarding the "constitutionally linked role," adding that most who oppose it "don't understand my proposal." The setting of a business tax and cap in the state would constitute a statewide property tax, which is prohibited by the Texas Constitution. Thus an amendment would be required to set such a tax and rate. He said that remains the best option because it "preserves a degree of local control that a statewide property tax does not." The link, he said, keeps residential dollars in local communities and allows for 15 cents for local enrichment.
The constitutional link, said Perry, lowers the residential tax rate by 25 cents, while setting an employer tax rate at $1.40. He said the result is a reduction in residential tax rates of $2.8 billion less than any other alternative being proposed and that it also provides for further reductions in residential and employer tax rates in years of surplus until both rates are lowered to 75 cents at the same time.
The proposal provides employers with greater tax protection, not less, by placing it in the constitution, said Perry. That would result in no new business tax, would cut in half the maximum rate for employers and would avoid "the easy road" of increasing homestead exemptions and providing employers "with not one cent in property tax relief."
Perry said it also will provide protections for "runaway spending" that will prevent a tax shift. "Most Texans will tell you they're paying enough in sales tax already," he said. If the sales tax were expanded, it would be done "at the peril of giving professionals in other states a real advantage" over Texas professionals, resulting in business and business professionals leaving the state.
"When you start thinking about the costs associated with the alternatives...I think my plan will attract a second look from some of the skeptics," said Perry.
The Perry plan also includes a proposed appraisal cap and a local tax cap. The governor said the plan provides a "cushion" for local governments by allowing growth relative to population increase and inflation and added that it "in no way" impacts revenue generated from other taxes and fees at the local level and provides local governments relief from unfunded mandates.
"We're not talking about the government's money here," said Perry. "We're talking about taxpayer's money." He said the state cannot base property tax cuts on a "trust me" approach. "If government won't trust the people, why should the people trust government?" he asked.
Perry concluded his testimony by saying success in addressing school finance will require the leadership and the legislature working together to solve the public school finance crisis - "everyone helping to pull the wagon."
The goal, said Perry, is "consensus, not combat." While saying he welcomes "fair criticism" of his plan, he urged those who criticize to offer "constructive alternatives."
"Leadership is about more than saying what you're against," he said. "It requires saying what you're for. Whether you like my plan or not, Texans know where I stand and where I want to lead."
Perry fielded inquiries from members of the committee - from questions regarding teacher benefits to how he determines the amount of the "surplus" that he projects will be used in future years to help drive the tax rate down to 75 cents per $100 valuation for both residential and business property.
Noting that the Legislative Budget Board will determine how much of a surplus there is, Perry noted that there were surpluses in the 90s and with the recent "good news" on the economy, he expects surpluses in the future. He again noted that the alternative would be a "huge tax bill" that would cost upwards of $20 billion and not include "one new dime for public education."
When questioned regarding whether the property tax cuts and addition of new revenues are "tax hikes," Perry responded, "What I consider them to be is a shifting away from property taxes to other sources of revenue." He was also asked how a one-time infusion of revenue would be replaced in the future, because some of the funding in Perry's proposal is based on accelerated tax collections from future years. He deferred answering of that question to Mike Morrissey, his Budget, Planning and Policy director.