Solving the property tax paradox

By Terry WIlson, Texas House District 20

On the March 6 primary ballot, both the Republican and Democrat primaries have proposed planks that deal with education and education finance. Before we vote on these proposals, let’s reflect on the history of public-school finance and explore the challenges our current system faces along with the proposed changes. 

Of the 13 grievances in the Texas Declaration of independence, a lack of public education was listed right in-between being denied the right to a jury trial, and the dissolving of the Texas Legislature by the Mexican army. We can certainly see how our founding fathers valued education.  

When our current constitution was written in 1876, the framers once again placed education at the forefront; requiring the legislature to “provide and fund an efficient system of public schools to provide for the general diffusion of knowledge.”

This core tenant became the test our courts use to determine if we are meeting our constitutional requirements.   

The first is the “general diffusion of knowledge”, which requires us to provide access to a quality education that enables students to achieve their potential and allows them to fully participate in social, economic, and educational opportunities, both now and in the future. This has become known as the adequacy test. 

We also have the requirement of “efficiency”, the cause of all our difficulties in using property taxes to fund public schools. We use local funding so that the money stays closer to the people, but the efficiency requirement says that all areas must pay a reasonably similar level of taxation. So, when property values go up, tax rates can’t come down to compensate unless that is the case for the entire state.

When we shift the burden of school finance to local property taxes, as we have for the last 16 years, some areas can afford that more than others. We must ensure that all students have an adequate education.  Constitutionally, one district cannot charge a very low rate to pay for just its own needs, if other districts are struggling to provide for their basic needs even at a high rate of taxation.  

For example, what Houston can make up for with a $0.01 tax bump could force a tiny district like Buckholts ISD to raise their taxes all the way to the cap. Constitutionally, we can’t have districts taxing at vastly different rates across the state. The chosen solution was recapture, also known as Robin Hood, moving property tax revenue around to fulfill the efficiency requirement.

For decades we have put clever solution on top of clever solution, ending up with a ridiculously complex school finance system that is more focused on trying to solve this paradox than on educating our children.   

If we want to see our students prosper, our schools must be able to meet the needs of their communities. To do that, they need an education system that allows the local schools the freedom and funding to teach the necessary skills.

One of the most promising alternatives is the proposed property tax / sales tax swap mentioned in the Republican primary ballot. It would trade a few cents increase in statewide sales taxes for a large across the board cut in school property taxes, shifting the burden back towards the state to cover the cost of education.   

I want to be clear though, this isn’t just about putting more money into education. We’ve done that many times before. Here in House District 20, spending has tripled over the last 16 years, outpacing population growth and inflation. 

What this IS about, is reducing the complexity of the system, allowing local school districts to drastically reduce their property taxation, and use the property tax revenues they do collect to improve and customize their schools to meet the unique needs of their students and communities. A simplified system also allows for greater accountability, making it easier for the public to track how our state, and our school districts, collect and spend taxpayer dollars.

Doing so would ensure that we get the greatest possible value out of the money we are already collecting for, and spending on, education. This could reduce our reliance on debt to finance construction and modernization of our schools through endless bond issues. 

Fixing education in Texas is going to require a fresh start, with ALL options on the table. We need to look to places like Indiana, which is 29th in spending on education but 4th in math scores. We will need to look to leaders like CREEED in El Paso, where private business, education foundations, and school districts have come together to help create an employment pipeline to help lift people out of poverty and improve the quality of education.  

Justice Willett put it best in his 2016 ruling on the constitutionality of our current system, “Texas’s more than five million school children … deserve transformational, top-to-bottom reforms that amount to more than Band-Aid on top of Band-Aid. They deserve a … system fit for the 21st century.”

For all the noise about tax reform in the 85th session, there was no serious effort to make true tax relief or education finance reform happen. It’s time to stop kicking the can down the road. Tuesday, March 6, is your opportunity to make your statement at the ballot box.