"But the former governors who were before me laid burdens on the people, and took from them bread and wine, besides forty shekels of silver. Yes, even their servants bore rule over the people, but I did not do so, because of the fear of God."
Nehemiah 5:15
We LOATHE the notion that the government has to 'pay for' allowing citizens to keep their own money. Nevertheless, in the current discussion of property taxes and school finance, it's unavoidable. In that spirit, we've recently noticed a common theme.
The Trib last week:
Texas lawmakers looking for enough money to rebalance the state’s school finance system face an obstacle course: the state’s property taxes are the sixth highest in the country as a percentage of property values, sales tax rates are 12th highest, and the absence of a state income tax is so dear to Texans that politicians haven’t had a serious conversation about it for more than a quarter century.TPPF the next day:
Perhaps there’s another place to look: Texas Comptroller Glenn Hegar issued his annual estimate of the value of taxes that Texans do not pay because of various tax breaks.
His office has a lot of different descriptions of tax breaks; the report “estimates the value of each exemption, exclusion, discount, deduction, special accounting method, credit, refund and special appraisal available to payers of Texas’ sales, motor vehicle sales, franchise, oil production and gasoline taxes, as well as property taxes levied by Texas school districts.”
If that spiel didn’t take your breath away, perhaps the estimated total value of those breaks in fiscal year 2019 will do the trick: $59.8 billion.
About three-quarters of those exemptions apply to state taxes; the remainder — $14.2 billion — is exempted from school property taxes.
....
It makes a scrub of the state’s tax exemptions more attractive, even if each of those breaks has a constituency that benefits. Every one of those groups — yours, even — would put up a fight, but it might be the least painful way for lawmakers to find a large amount of money to fix the school finance system without a voter revolt.
If roughly $60 billion in various kinds of breaks are marbled into the state’s annual revenues, and you need just under $6 billion of that each year to level out the school finance system, it’s worth a look.
“Under Chapter 313, important decisions about state funding for schools are taken out of the hands of lawmakers who are accountable to state taxpayers. In fact, Chapter 313 has played a major role in transforming the funding of Texas’ K-12 public schools into an extremely complicated and counterproductive game of ‘beggar thy neighbor.’”The Trib this morning:
Despite public school officials in districts benefiting from Chapter 313 being highly in favor of the financial gains they’ve negotiated, little or no long-term educational benefit result from increased funding unaccompanied by meaningful changes in how students are instructed or how teachers are recruited and rewarded for their work.
“When the Texas Legislature convenes in January, legislators may decide whether or not the Texas Economic Development Act (Chapter 313) gets renewed,” said Cutter Gonzàlez, a policy analyst with the Texas Public Policy Foundation. “This paper exposes concerns about property tax abatements that show why lawmakers should keep decisions on state spending in their hands by letting Chapter 313 expire.”
But it’s the tax problem — the price of owning property — that has made their price-sensitive voters potentially receptive to increases in other taxes. New money could come from eliminating exemptions, from property appraisal reforms, from raising existing tax rates or creating new taxes — any number of things. They’ll decide the details when they meet. They’ll figure out what to call it, too: It might be remarkable to see “tax” in the title of the governor’s presentation, but its neighboring word — “reform” — is the political touch.
In other words, by eliminating various carve outs, we can either lower tax rats and/or generate revenue to cover better school funding formulas.
While it's not in the context of the current session prep, it's also worth noting that the Texas Observer has previously thrown shade on Chapter 313:
The scale of Chapter 313 dwarfs its better-known counterparts, the Texas Enterprise Fund and Emerging Technology Fund. Those two programs came under scrutiny in recent years as reporters and legislators found evidence that the governor had used them as slush funds for his friends. But at least those programs had a limit. Since 2003, the Legislature has spent $781 million from the two funds, which is $43 million less than Chapter 313 will cost the state in the next two years. Next year, the state will give away enough money in the program to pay for 50,000 students’ education. Chapter 313 is limitless, and each year the price tag runs higher. From 2002 to 2014, Texas schools committed to tax breaks that will hoover $5.5 billion from the state’s budget — more than the Legislature cut from public education during the recession. Deals signed in the last two years have driven the lifetime cost of the program above $7 billion, with no signs of slowing down. Recent applications awaiting approval — if history is any judge, nearly all of these will be approved — represent another $979 million. The program has been more popular than its creators ever imagined.Let's not kid ourselves: The business lobby will go BONKERS if this sort of discussion were to gain traction. But...who cares?!? If they business lobby doesn't like high taxes, they should help keep taxes low for everybody rather than creating special deals for themselves.
Furthermore, this is potentially a game changer in terms of re-aligning the incentives of the business lobby at the local level.
Bottom Line: If TPPF, the Trib, and the Texas Observer can agree on a way to broaden the tax base while lowering tax rates/more efficiently funding education...that might be an idea which we should listen.
