Just as the first special session called by Gov. Greg Abbott was scheduled to run out of time this Wednesday (with legislators passing zero bills), Abbott immediately called a second special session on the very same issue that stalled the previous special session: property tax relief.
Negotiations have stalled on how to allocate over $12 billion in property tax relief currently appropriated in the state budget (on top of the $5 billion in property tax relief already allocated to rate compression). The Governor and House have been at odds with Lt. Gov. Dan Patrick and the Senate, as neither side has budged on the demands outlined in their opposing property tax relief plans that were filed last session.
The outlook for this special session does not seem to be substantially different so far, as both chambers have refiled roughly identical legislation to that which they filed during the previous special session.
Property taxes are a primary funding source for our state’s public schools, representing about 50% of the total school funding from non-federal sources. In providing billions of dollars in property tax relief, the state is effectively replacing the revenue schools receive from property taxes with state revenue from other more volatile and regressive sources, such as sales taxes. The property tax relief proposals under consideration do not represent an increase in public education funding, rather they represent a swap in funding sources that the state could struggle to sustain in an economic recession.
Even as the legislature cannot agree on a plan to reduce property taxes in the short term by allocating money already appropriated in the state budget, Abbott has upped the ante in his call for a second special session by calling on the legislature to come up with a plan to totally eliminate school district maintenance and operations (M&O) property taxes over the long term.
Property taxes are a necessary input to fund our public schools. No alternative funding source has been proposed that would adequately fund our state’s schools. Reduction of property taxes would lead to a greater reliance on sales taxes, which are less equitable and more regressive. Considering that the legislature failed to fully fund our state’s schools this session, even with a record-breaking $32.7 billion surplus, there exists no pathway to fully funding Texas public schools both without M&O property taxes and without a state income tax (which is unconstitutional in Texas).
As legislators debate how to cut off school districts from necessary funding sources, teachers did see one silver lining this week thanks to Sen. Roland Gutierrez (D-San Antonio). In the midst of the property tax debate, Gutierrez proposed an amendment to SJR 1, which provides funding for property tax relief, that would provide Texas teachers with a minimum $2,000 supplemental check each year of the biennium, effectively a two-time bonus. Teachers in smaller school districts with 20,000 students or less would receive a greater $6,000 check each year according to the current plan.
The proposal would dip into the state’s surplus funds and would cost approximately $3.2 billion. The amendment was chiefly authored by Sen. Roland Guitierrez, but all 31 senators signed onto the amendment.
A roughly identical proposal was included in SB 9 during the regular session, but that bill failed to pass. Texas AFT has issues with the inequitable distribution of funds based on district size included in this plan, but we appreciate that the Senate is prioritizing teachers in policy debates that will substantially impact the state’s school finance system. Texas AFT hopes that legislators in the House will also prioritize public educators in their property tax relief plan as it makes its way through the legislative process.