The Texas Supreme Court has finally weighed in on the issue of school finance. The bottom line is that the method of financing schools in Texas has been declared unconstitutional, and lawmakers have been given until June of 2006 to fix it. The Court did not, however, require more money be devoted to public education, although a strong case can be made for that as well. I’m no legal scholar (and proud of it), but I can shed a little light on the situation from the perspectives of economics and ducks.
Basically, the Texas Constitution prohibits a statewide property tax. We have school, county, city, and all kinds of special district property taxes, but cannot have one at the state level. The problem is that we have a ceiling on school taxes for maintenance and operation of $1.50 per $100 valuation and, the way funding formulas work, virtually all areas are compelled to be at or near that level. Thus, while the tax is collected locally, for all practical purposes, it acts like a statewide levy. Thus, the Supreme Court applied that time-honored principle—if it waddles like a duck, looks like a duck, and quacks like a duck, it’s a duck!!!
The end result of this ruling is that, after many fits and starts, the Texas Legislature will likely have to change our tax system in a Special Session in the spring. Property taxes will be lowered and replaced by something else. This mandate could plant the seeds for bringing the Texas tax system into the current millennium, making our state more competitive for the industries of the future and more responsive to modern challenges. Governor Perry has appointed a Tax Reform Commission, headed by his extremely capable former political foe, John Sharp, to craft a plan. While the task is daunting, this reaching across party lines offers an excellent opportunity to get something done. Hopefully, a bipartisan recommendation can provide our esteemed elected officials with a mechanism to do what needs to be done despite every sort of pressure from all sides.
The key is to have a fair, broad-based system which doesn’t unduly burden one sector over another. There are many ways to accomplish this aim. Some are slightly more efficient than others, but any of them would be a great improvement over where we are now. Tweaking the current system to narrowly meet the Court mandate is not enough; as hard as it is, we should start on a path to a better fiscal structure. In other words, a band-aid fix is insufficient; we need to get our ducks in a row.
I would be remiss if I also didn’t say that we ought to take a serious look at how much additional money, if any, is required to have a truly excellent educational system. I have no doubt there are many efficiencies that could be achieved in the present system, and I am equally certain that technological advances can take us even further. We should aggressively explore what is working around the world and what we can do to produce a well-educated citizenry and workforce that can function amidst the rigors of the global business environment. If we fail at this mission, all we will be accomplishing is rearranging who pays for the existing structure.
Outcomes have improved of late, and that is most encouraging. Given the demographic realities of the next few decades, however, there is obviously much more to be done. If we don’t invest the needed resources into public education, we are handing the potential competitive advantage afforded by our growing pool of young people to other regions of the nation and the world. They will be able to pick us off like—well—ducks on a pond.
After years of trying to reform our tax system, the Supreme Court has provided both a requirement and a hard deadline. The decision opens the way for visionary leadership. The Sharp Commission is composed of capable and informed individuals who can make meaningful recommendations. The members of the legislature can enact substantive measures, and, despite the morass of recent sessions, I have no doubt that the leadership and drive to make Texas a better place is there in more than ample quantities. If we make notable progress toward modernizing our tax system, much will have been accomplished. On the other hand, even if all of this effort proves successful, it will not be a complete victory if we do not simultaneously take tangible steps to elevate academic achievement. We must not declare “open season” on our students and our future prosperity.