Molly Ivins April 6AUSTIN — Continuing consideration of TexasTaxesTexasTaxesTexasTaxes: When the Legislature manages to do Something Big, there is a happy tradition at the Capitol of dishing out credit generously to all hands. (Blame is not so generously shared.) It looks as though the Lege — maybe, probably — is about to achieve both major property tax relief and a better way to fund the public schools. Let blessings shower on the head of Gov. Shrub Bush, who got the debate started and helped keep it on a high plane. Disgruntled Democrats may grumble that Bush only wanted political brownie points, that he was just copy-catting Gov. Christine Todd Whitman in New Jersey or that he'll get the credit that belongs to the D's, who took his idea and made it a far, far better thing. Bush is still the man who got the deal off the dime, so good on him. Lt. Gov. Bob Bullock — who knows more about state finance than anyone alive — was, as always, a major player, and House Speaker Pete Laney chose the All Stars on the Select Committee on Revenue and Public Education Funding, headed by Rep. Paul Sadler of Henderson. The committee came up with the plan. Bush's original plan was to take the state's $1 billion surplus and use it for property tax relief. The surplus came from frugal state spending (credit to Comptroller John Sharp), an overestimate on student population growth and a $350 million windfall from the feds that properly belongs in the new welfare program. The trouble with the Bush plan was it was pretty much a one-shot deal and would leave the Lege scrambling for money again in two years. We've known since the '60s that our public schools suffer from an overreliance on local property taxes. Property taxes are stable and predictable, but they lag behind economic growth. We need an additional $1 billion to $1.5 billion every biennium just to keep up with the additional 70,000 students we add. The Select Committee started with goals and worked backward from there. The members wanted to get residential property taxes down from their current state average of around $1.30 (per $100 of assessed valuation) to 50 cents and business property taxes down from $1.52 to $1. You can't cut property taxes that much without turning school finance upside down. Because the state is under court order to equalize school financing, the obvious solution was to broaden the school tax base as much as possible. The committee noodled around all kinds of schemes — a value-added tax, a gross receipts tax, a business activities tax.
The solution was for the state to take on a much larger share of school finance — 90 percent of maintenance and operations — and pay for it by making the business property tax statewide and closing loopholes and exemptions in the sales tax and the corporate franchise tax. Voila! Significant property tax relief, no new taxes (although Capitol lobbyists are in shock) and better school funding. Sadler originally thought it would take $10 billion or even $11 billion (it's closer to $7 billion) to fund the new plan. He looked at the members of the committee and said: "OK, everyone come up with a billion and we've got it paid for." They were surrounded by volumes and volumes sent over from the comptroller's office, detailing exemptions and loopholes. They plunged in, and the first guy to raise his hand and sing out "I got my billion" was Tom Craddick, the senior Republican in the House. There are $7 billion to $8 billion worth of exemptions in the sales tax alone, usually cleverly chiseled in by generations of lobbyists in back-room deals. But the real snake's den is the corporate franchise tax, which corporations can evade by legally transmogrifying themselves into partnerships, and they have been doing so in ever-increasing numbers, with concomitant loss of income to the state. For example, my own Fort Worth Star-Telegram operates quite legally as a partnership, even though it is actually (for the moment) a corporate subsidiary of the Walt Disney Co. With the state picking up 90 percent of the operating and maintenance cost of the schools (facilities had to be left out because each of our 1,044 school districts carries varying rates of bonded indebtedness — a fiscal nightmare), the state can now get out from under the court-imposed Robin Hood plan, under which taxes from the wealthiest districts are taken and spread around to everyone else. The plan is revenue neutral; even the businesses now pleading for their exemptions will get property tax relief in return. The only hitch is there is no way so far to force landlords to pass their property tax relief along to renters, who tend to be among the poorer citizens. They're still working on that. The only political interference so far has come from state Republican Party chairman Tom Pauken, who seems to be singularly ill-informed about the plan. His news releases indicate that if he would bother to attend the committee's sessions — the most astonishingly open process anyone around the Capitol can remember — his misimpressions would be easily resolved. And, of course, if a person wants to stand in front of a political freight train loaded with a 50-cent cap on residential property taxes, a person is always welcome to do that. *** Molly Ivins is a columnist for the Fort Worth Star-Telegram. COPYRIGHT 1997 CREATORS SYNDICATE, INC.
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