[CSPS] a $6B shortfall?

Fri Jun 9 12:00:08 CDT 2006

from http://www.educationnews.org/Commentaries/23_billion_hot_check.htm

The truth about Gov. Perry's public education non-fix:
A $6.1 billion budget shortfall & a $23 billion 'hot check'
By Peyton Wolcott
www.peytonwolcott.com

At the same time Texas Governor Rick Perry is circulating ads 
promoting property tax cuts ("Homeowners and businesses will save 
$15.7 billion on school property taxes") achieved during the 79th 
Legislature's third special session, called specifically to solve 
problems with constitutionality and funding in paying for Texas 
public schools, just emerging is that the special session actually 
created a $6.1 billion shortfall* for which there is no solution save 
an unrealistic forecast of an unprecedented ten-year cycle of 
boom--or the more realistic and plebian fixes of trimming government 
spending and increasing the state sales tax, at $.0625 already among 
the highest in the U.S.

Because Texas has no state income tax, schools are funded far less by 
the state (the Texas Permanent School Fund's disbursements are 
currently at $765 million) and much more by local property taxes 
($18.6 billion). Under 1993's Robin Hood, many districts are 
approaching the $1.50 M&O and $0.50 I&S cap per $100 valuation, which 
scheme the Texas Supremes found unconstitutional as it amounted to an 
illegal state property tax, and gave the Legislature a June 1, 2006 
deadline to find a cure; hence this last special session.

So the Lege has just passed a series of bills which will lower the 
maximum property tax to $1.00 in two years for districts already at 
$1.50 M&O, and make up the difference with a revised business 
franchise tax meant to close the business-friendly Delaware Sub 
loophole, with an additional $1.00 cigarette tax along with a new 
used car tax, all projected to yield a $4.2 billion* revenue stream 
by fiscal year 2009.

But at the same time, Lege appropriations are projected at $10.3 
billion* by FY 2009 and include a $2.4 billion across-the-board 
teacher pay increase over the next three years, $600 million in 
teacher awards, and $275 per high schooler for reducing dropout rates 
and college prep.

Robbing Peter to pay the piper

When questioned about the $6.1 billion shortfall, the governor's 
spokesman Kathy Walt said yesterday, "The revenue sources you cite 
[above] represent only those bills passed during the special session. 
They do not reflect the surplus, nor do they take into account new 
revenue estimates that will be generated prior to the start of the 
2007 regular session. The tax measures passed by the legislature will 
go into a property tax reduction fund to pay for future reductions of 
property taxes. Should additional revenues be needed beyond what 
these taxes generate and is available from surplus, general revenue 
(GR) funds could be used. The new tax measures represent only a small 
portion of revenue that flows into GR."

Huh? Public education to be funded by a $23 billion 'hot check'?

Comptroller Carole Keeton Strayhorn, who is running as an independent 
against Perry in this November's gubernatorial election, said in 
certifying HB 1, the largest single piece of legislation this 
session, "Perry's entire plan is a massive increase in business taxes 
that will increase the state's budget by $6 billion a year [and] 
leave a $23 billion hot check."

Another state official, speaking on condition of anonymity, said 
yesterday, "All of this money, this surplus the governor's talking 
about, is already dedicated. And a $6.1 billion income spike is 
unrealistic, unless it comes from a combination of further cutting 
state government expenses and increasing the sales tax. The problem 
there is that you only get $2 billion per penny of tax, and our sales 
tax is already one of the highest in the nation. So the 10% budget 
cut the governor announced yesterday afternoon represents the first 
element of what we knew had to come in order to fund this boondoggle, 
and the next will be an increased sales tax. Even though right now 
we're awash in fuels tax money, how long will this continue? The 
governor's saying we've got to boom like this for the next ten years."

War of the Worlds

Put simply, while a major conservative premise is that cutting taxes 
will boost the economy, the corresponding liberal premise is that 
more money needs to be spent on governmental services. Perry's 79th 
Legislature's third special called session delivered both a tax cut 
and increased spending, and appears to not pass the mandated 
constitutionality threshold. While according to Governor Perry's 
press release "this is one of the most significant legislative 
accomplishments for Texas in a generation, because it is one of the 
most significant steps we have ever taken to improve opportunity for 
the next generation" and "because of House Bill 1, school finance is 
now out of the courthouse, and back on constitutional footing," 
constitutional law experts such as Charles Rhodes of South Texas 
College of Law are expressing their reservations. Says Rhodes, "I 
have questions as to how long the new financing scheme is going to be 
considered to be constitutional. I think it's another short-term fix."

<http://www.peytonwolcott.com/PayingForTexasPublicSchoolFinanceAPrimer.html>For 
the full version

* SOURCE: House Research Organization/Legislative Budget Board

The 79th's 3rd's legacy: You do the math

Appropriations by FY 2009 $ 10.3 billion
Revenues by FY 2009 $ 4.2 billion
Shortfall $ 6.1 billion*
Peyton Wolcott's new school reform website www.peytonwolcott.com has 
recently been named "The Smoking Gun of American education." She 
lives in Horseshoe Bay, Texas.

Copyright 2006 Peyton Wolcott - All rights reserved

Jonathan Coopersmith
Associate Professor
Dept. of History
MS 4236
Texas A&M University
College Station, Texas  77843
979.845.8584
979.862.4314 fax

Secretary
History & Philosophy of Science Section (L)
American Association for the Advancement of Science
aaas.org 
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