Texas Maybe Missing the Point on Taxes

In previous postings we have discussed the problem that we face in Texas on the front of school finance. Since that time the Texas Supreme Court has ruled on the school finance lawsuit and deemed the funding equation to be “constitutional.” While noting that it is not fair, equitable, nor sufficient; it does meet the criteria of constitutional. In other words, they did not want to be the decision-maker but rather kicked the can back to the Legislature, who were depending on the courts to come up with a solution as they have over the years with previous court cases. This is the reason there has been band aid fixes placed over the real problem on numerous levels, complicating the funding formula, and put the funding more in terms of inequity on a growing basis.

Now let’s analyze our current state of legislative priorities which appear to be education savings accounts or “vouchers”. This is a way for the money to follow the child in laymen’s terms but it is a thorny issue. All public schools are subject to multiple levels of annual audits of funds, attendance, activity funds, grant funds, etc. We fill out multiple reports to both the state and national government to account for where our tax dollars are spent and this is a wise and prudent method to ensure that our money goes where it is intended. However, in the current methods allowed to education savings accounts there would not be these measures of assurance in place for charter and private schools. This money would free flow without the governmental oversight, which leads to problems that unfortunately are not found until it is too late to remedy and recoup. It is true that in this world there are good and bad public schools and it is also true that there are good and not so good charter, private, and home school situations. It is not the format but the program and people that make a difference. The unfortunate reality is there is a lot of money to be made if the Legislature and the lobbyists involved can begin to privatize the public schools. It is a billion dollar industry that at this time is highly unregulated on the private sector side. It is the wild Wild West. The other problem with the situation is that they can pick and choose who attends their school and what programs they will offer such as ESL or special education services- the public school, and rightly so, is responsible to educate ALL children regardless of the circumstance.

The argument can be that it is my tax dollars and I should be able to send it with my kids? Does this work with any other tax program? If I do not have kids am I not responsible for school tax or bond tax? If I am not sick do I not pay for hospital or EMS service or fire department? No, we are all responsible for our community and state services. Teachers, police officers, firemen, doctors, nurses, etc. are necessary services and our first responders are dedicated to educating and protecting us and our children. Our public school system is in place to ensure that all children have access to a free and appropriate education. The other issue that seems to be ignored is that as we move more to charter and private schools, we are overall becoming more and more segregated by color, class, and condition which has been deemed unconstitutional in our school system for over 50 years.

An interesting phenomena is taking place with the state legislature as they seem to be fixated on property tax limitations and decreasing the amount raised by the city, county and public schools- however there is a problem with this picture. In terms of the school tax we have analyzed earlier that the way the funding formula works is that as local property values increase more of the share of the money necessary to fund the local schools is supplied by the local valuation and the state reduces proportionally the amount that they have to allocate. The school receives the same amount of money regardless but the tax burden is placed more heavily on the local tax base. The money that the Legislature does not have to appropriate to each district is then placed back into the general fund to fund other projects to the tune of over $2 billion a year. Our school taxes are actually filling in gaps in the state budget and the Legislature can claim to be “more efficient” while the local taxing entities take the brunt of the push back for taxes going up. This $2 billion would more than fix the school finance problem but instead it is siphoned off for other agenda issues and contributing to the ever increasing rainy day fund. In essence, our local school taxes are a cash cow for the state to fund other programs than what is intended when we pay our annual tax bill. This amounts to a state tax if analyzed from a constitutional and conservative viewpoint. It is frustrating and hypocritical for our state leaders to chastise the local tax situations of our cities and schools and try to “cap” them when they have directly profited from the current system. In the current system with the Robin Hood formula local funds are forced to the state, allowing them to abstain from raising the money they need to fulfill their duties to provide state services.

An illustration of this situation is evident in the following: Local spending on public schools is up 44% over the last 8 years (due to property tax) and federal dollars towards public education is up 22% over the same time period. However the State of Texas share has gone up only a little over 7% in the last 10 years (from Texas Tribune). However student enrollment over the last 10 years is up 17% so it is a no-brainer that spending by the state is half of what the enrollment growth has been. It is not keeping pace at all and in fact the Legislature cut school funding over that time and has not even caught up with where we were prior to the recession. If you look at it on a per pupil spending basis it is more glaring- local spending rose $990 per student while state spending dropped $339 and federal spending rose by $45 per student.

It is an accountability issue as property rich districts are able to raise more revenue and the local boards who set property taxes get the blame for high taxes- even when it is caused by the Legislature’s declining support of their financial responsibility for funding public education. School funding is 50% of the state budget so this is the area to hit if you want to proclaim to be fiscally conservative as a politician even if you pretend that it is not your decisions that have forced the burden back on the local entities.