Lieutenant Governor to Lay Out State Property Tax Plan

Acting Lt. Gov. Bill Ratliff on Wednesday proposed the creation of a statewide property tax to be used to fund public schools, an idea that intrigued some and angered others.

Fixing the school finance system, which many believe is unfair and inequitable, has emerged as a top issue that is expected to dominate the 2003 legislative session.

Some property owners would see their taxes go up. Others would see them stay the same or go down under Ratliff’s plan.

The goal of the statewide tax is to ensure all Texans pay the same property tax rate and that all public schools are funded equally, said Ratliff, R-Mount Pleasant.

“I don’t know what the alternative is,” Ratliff told the Senate-House Committee on School Finance. “There may be other ideas. And I hope so. I just haven’t seen them.”

Some members of the committee welcomed Ratliff’s idea because it would ensure rich and poor school districts were funded at the same level. Others worried the plan would cause frequent tax increases for voters.

“It’s a tax increase. It is a new tax. And it dilutes local control,” said Peggy Venable, executive director of Texas Citizens for a Sound Economy, a conservative watchdog group. “The plan simply funnels more tax dollars into education without asking any questions regarding outcome.”

Senate Finance Chairman Rodney Ellis, D-Houston, applauded Ratliff’s “courage,” and said new ideas are needed to find a solution.

The proposal would require a new law and voter approval because the Texas Constitution prohibits a statewide property tax.

The state now pays for about 40 percent of public education, about 50 percent comes from local taxes and the rest comes from the federal government.

Under Ratliff’s plan, the state would pay about 90 percent of Texas’ public education costs. Lawmakers would use the statewide property tax revenue plus general revenue to fund schools, he said.

The local school district property tax for facility maintenance and operations would be abolished. Local authority to levy bonds for debt services would remain, and the state would guarantee it would help pay for such debt.

Property tax revenue could only be used for funding public schools.

School districts that wanted more money for additional programs would be allowed to levy an additional local property tax, up to a dime per $100 of valuation.

Ratliff stressed that his idea was a starting point that could be changed by lawmakers. He wrote the current law known as Robin Hood, which sends some money from property-rich school districts to poorer districts in an attempt to have equity.

The statewide property tax “gets away from the perception that local districts have to raise money and then they sometime send a large share of that money either to Austin or to some other school districts that they think they should have been able to spend at home,” Ratliff said.

His plan did not address the amount of education funding, which concerned some on the committee who say part of the problem with the current system is not being able to keep up with the expense of a fast-growing student population.

“If you simply create a statewide property tax, you achieve greater equity, but you don’t necessarily solve our problem, which is capacity,” said Rep. Paul Sadler, co-chairman of the committee.

Ratliff said his plan was not meant to address the quality or growth of education, but simply the best way to fund it. Exactly how much is up to the Legislature, he said.

“The only way to raise more revenue is to enact more taxes or raise the ones you have now,” Ratliff said, adding that he does not believe lawmakers are willing to do that.

Texas gets most of its revenue from sales tax, local property tax and business tax collections. The state constitution also prohibits a personal income tax.

The plan also would allow the Legislature to have more control over education money to pay for programs such as statewide teachers’ health insurance or the reading initiative, Ratliff said.

His plan contained an option that would allow lawmakers to approve a supplemental property tax to improve the teachers health insurance program.