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 fix save an unrealistic forecast of an unprecedented ten-year cycle of boom–or the more realistic and plebian fixes, trimming government spending and increasing sales taxes.
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.