Easy Come, Easy Go: The Legislative Session that Just Won’t End

This week we said “goodbye” to the 88th regular session … and then, just a few hours later, said “hello” to the first special session of the 88th Legislature. In this week’s Hotline, we recap the end of the regular session, provide an update on the first (of “several”) special sessions, and start to unpack what all this turmoil means for public schools.

The End of the Regular Session

While the last 48 hours of a regular legislative session are typically reserved for administrative tasks and ceremonial signings, this session, the Texas House and Senate were in deep negotiations up until the very last minute of session. 

Unfortunately, neither side was negotiating to increase educator pay, improve school working conditions, or generally improve our state’s schools in any way. Instead, both sides were arguing two different plans for cutting property taxes.

This past weekend HB 100, the school finance bill by Chairman Ken King (R-Canadian), which would have increased the basic allotment, officially died after the Texas Senate tried to attach a private school voucher proposal to the bill. 

The version of HB 100 that passed the House would have raised the basic allotment by $90 per student next year, but the Senate version of the bill would have only raised the basic allotment by $50. The Senate version also included a voucher program that would divert billions in dollars of funding away from public schools in the coming years.

By amending the bill to include a voucher, the Senate effectively held public school funding hostage to force the House into passing a private school voucher scam and senators all but admitted this on the Senate floor.

When the House and Senate pass different versions of the same bill, as was the case for HB 100, the chamber that first passed the bill can either choose to accept the opposing chamber’s changes or it can oppose those changes and request a conference committee. A conference committee is made up of five representatives and five senators. These 10 legislators negotiate on behalf of their chamber to negotiate the final version of the bill.

In the case of HB 100, the negotiations were very short, and the two sides could not come to an agreement. The Senate refused to accept any version of HB 100 that didn’t include a voucher, and the House members of the conference committee stayed firm in their resolve to pass a clean school finance bill that did not include a voucher.

While the impasse ensured no voucher would pass this legislative session, because of the Senate’s scheming, it also meant no increase to the basic allotment was forthcoming. 

The basic allotment is the primary building block of per-student funding in the school finance formulas. This amount is set arbitrarily by the Legislature, and it has not increased from its current level of $6,160 since 2019. It would take an increase of approximately $1,000 just to keep up with inflation since 2019.

The final version of the state budget that passed both chambers over the weekend appropriated $3.96 billion to public school funding. But this funding will only be disbursed to school districts if a school finance bill passes. With HB 100 dying in conference negotiations, there was no school finance bill, so these funds will not be disbursed to school districts until a school finance bill passes. 

School districts that are currently working on their budgets for the next school year will have to do so without factoring in any basic allotment increase. Additionally, the Texas Senate’s failure to pass a clean school finance bill will result in educators losing out on billions of dollars of raises. 

As Sen. José Menéndez (D-San Antonio) revealed in his questioning of Chairwoman Joan Huffman (R-Houston), the Senate author of the budget, “the only pay raise in this budget that is contingent on the passage of other legislation is the teachers’ pay raise.”

In addition to the $3.96 billion in the budget contingent on the passage of a school finance bill, there was also $500 million in the budget contingent on the passage of a voucher bill. Unless a bill is passed to access those funds, those funds will not be appropriated — another half-billion dollars not going to public schools.

In response to the failed negotiations, King released a statement in which he condemned the Senate for using educators as a bargaining chip, stating, “Only teachers are punished over a political fight.”

King, an anti-voucher Republican, went on to say, “I am truly sorry that HB 100 did not pass, but in the end I believe students, teachers, and schools are better off with current law than they would be if we accepted what the Senate is offering. The governor likes to threaten special sessions. Well, my opinion of that is that I stand ready!”

Gov. Greg Abbott has stated that he intends to call a special session to push private school voucher schemes. The regular legislative session of the Texas Legislature lasts only 140 days, but the governor can call the Legislature back for special sessions that may last up to 30 days at his sole discretion. When the governor calls a special session, legislators may only pass laws that pertain to the topics that are laid out in the governor’s call. That said, the governor cannot force the Legislature to pass any piece of legislation.

There is wide speculation that the governor will call a special session to pass a private school voucher bill and a school finance bill this September, when most teachers are busy in the early days of the school semester. 

In addition to vouchers and school finance, Lt. Governor Dan Patrick has laid out a litany of other topics that he suggested be legislated in special session, many of which would be harmful to public education. However, only the governor can call a special session and set its agenda. 

The Beginning of the First of “Several” Special Sessions

While the governor apparently did not feel any urgency to call a special session to support public schools, he did call an immediate special session to address two other issues: property taxes and the border.

As the regular session came to a close without a deal on property taxes, House Speaker Dade Phelan and the lieutenant governor warned their respective chambers that, despite the regular session ending, legislators should not pack their bags to return to their districts. 

Within a few hours of the regular session ending, Abbott called a special session to convene the following day. In his letter announcing the session, Abbott stated this special session would be the first of “several.”

The governor’s call was very specific and prescriptive. In regards to the border, Abbott called for legislation “solely” to enhance criminal penalties for human smuggling and operating “stash houses.” In regards to property taxes, Abbott called for legislation to cut taxes “solely” by reducing the maximum compressed tax rate.

In the negotiated state budget, both the House and Senate agreed to spend $17.6 billion on property taxes, but throughout the regular session both chambers disagreed on the details of the plan.

The plans from both chambers went through several iterations, but generally the House plan emphasized appraisal caps and the Senate plan emphasized homestead exemptions. 

Appraisal caps limit how much a property’s taxable value can increase from year to year. A flat-dollar homestead exemption would knock off a fixed amount from a home’s taxable value. Appraisals are currently capped at 10%, but the House wants to lower that percentage. $40,000 of a homestead’s value is currently exempt from taxation, but the Senate wants to raise that amount. 

Both the Senate and House plans included some tax rate compression as well. While exemptions reduce a property’s taxable value and appraisal caps limit how much a property’s taxable value can grow from year-to-year, compression reduces the overall tax rate. Tax rate compression is applied to all property taxes, so corporations would also benefit from this kind of tax cut.

After both chambers failed to come to an agreement on how to structure the property relief in the regular session, Abbott decided to intervene and push for property tax relief solely through rate compression with his call for a special session. 

The House and Senate responded to Abbott’s call in very different ways. The lieutenant governor pushed the Senate to remain steadfast in its commitment to increasing the homestead exemption. The House instead quickly passed a property tax bill that compressed rates and a border security bill that increased human smuggling penalties on the first day of the special session.

When the House received word that the Senate had passed a bill that would provide property tax relief by increasing the homestead exemption, Speaker Phelan said the House wouldn’t even give this bill a hearing, stating that the bill is not germane to the governor’s call. Having addressed both items on the governor’s call, the House adjourned, leaving the Senate to either accept the bills it passed or go home with no property tax relief.

It is worth noting that homestead exemptions are a more equitable way to distribute property tax relief. As our friends at Every Texan explain, a flat-dollar homestead exemption provides roughly the same amount of relief to all homeowners, whereas cutting the percentage would provide disproportionate relief to wealthy homeowners with more expensive property. Renters would not receive direct relief from any of these plans.

Courtesy of Every Texan: Benefits from property tax cuts are differently distributed to different income earners, depending on how the property tax cuts are structured.

It is also worth mentioning that the $17.6 billion of property tax does not represent an increased investment in public education. Every time that rates are compressed or property is exempt from taxation, the state government is required to pay a greater share of public education funding. The public education funding “pie” does not grow, the state government just pays for more slices of the pie. 

Currently, the state is able to pay for this greater percentage of the pie due to our historic budget surplus, but as the state share of funding continues to grow and rates continue to be compressed, Texas could be left in a situation in which the state government cannot afford to pay for the compression. In that case, the public education “pie” would begin to shrink.

Property taxes are the primary way in which schools are funded at a local level, yet this week, Abbott suggested that he intends to shrink property taxes to the point that the property tax rate is $0. That would mean schools would be entirely funded by state dollars, largely raised from sales tax revenue. 

Limiting school funding sources sets schools up for failure, something especially obvious after a legislative session that resulted in $0 in additional funding for public education.
Lastly, it is worth pointing out that at least part of this $17.6 billion should have gone to schools. Part of that $17.6 billion could have been used to give you a raise. By our math, less than $13 billion is needed to give every teacher and certified professional a $10,000 raise and every support staff member a 15% raise. With a historic surplus, the state budget made minuscule investments in public education. Our schools are struggling, and the state continually refuses to make the necessary investments to keep the education system afloat.

Ken Paxton Impeachment

Amid all of these negotiations between the House and the Senate, the impeachment proceedings for Texas Attorney General Ken Paxton continued. Over the weekend, the House voted overwhelmingly, 121-23, to impeach Paxton. Now that he has been impeached, he has been temporarily removed from office. 

A trial will now be held in the Senate. Senators will act as jurors in the case, and a select group of House members will present the case as impeachment managers. The lieutenant governor can pick a date “not later than” Aug. 28 to convene the Senate for the trial. A two-thirds vote from the Senate is required to permanently remove Paxton from office.

While Paxton is temporarily removed from office, the governor has appointed former Secretary of State John B. Scott as interim attorney general. Before serving as secretary of state, Scott represented Donald Trump in a lawsuit attempting to overturn Pennsylvania’s presidential election results.