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Texas Senate Passes School Finance Plan, Remove Sales Tax Swap Provision

AUSTIN, TX – After nearly eight hours of debate and votes on about 70 amendments, the Senate passed House Bill 3, the chief school finance reform legislation, late Monday evening. The Senate’s version of the plan includes a $5,000 across-the-board pay raise for teachers and librarians, full-day pre-K for eligible children, merit pay for teachers, outcomes-based funding tied to statewide standardized testing, a school property tax rate compression of 10 cents per $100 of taxable value, and a property tax revenue growth cap at 2.5 percent.
Previously, the Senate Education Committee voted out a version of the bill which included plans for long-term property tax relief. One of those plans to make up for the lost income to public education was a 1 cent sales tax increase to buy down property taxes.   
Sensing the difficulty of passing a plan tied to a sales tax swap proposal which would only benefit the wealthiest Texans, Chair of the Education Committee and the bill’s author, Larry Taylor (R-Friendswood), removed the contingency language from the bill on the floor.
Also removed in the bill is the $10,000 increase in the homestead exemption.
With the help of a Senate revenue working group, the Tax Reduction and Excellence in Education (TREE) Fund replaced the sales tax swap in an adopted amendment by Senator Kirk Watson (D-Austin). The revenue for this fund includes $2.3 billion a year in existing oil and gas severance taxes from the Rainy Day Fund, increased transfer from the Available School Fund which gets revenue from the Permanent School Fund, and future sales tax collections from online purchases with third party vendors, which is expected to provide $300 million a year.  
Multiple amendments offered to add other school employees in the raise failed. There was an amendment by Senator Beverly Powell (D-Burleson) to repeal the outcomes-based funding provision of the bill. It too failed in a nearly party line vote with Senator Kel Seliger (R-Amarillo) joining the Senate Democrats in favor. A few of the amendments which succeeded included one to require the state pay for alternative testing used by school districts for merit pay and another to reduce the percentage of the STAAR test in the criteria used in merit pay.
Other amendments to increase the special education funding and bilingual funding allotments failed. There was, however, an amendment passed that proposes requiring a state advisory committee study how to fix the way the state funds special education. It appears there is little appetite for legislators to reform and improve special education funding this session until after TEA’s “Corrective Action Plan” gets approved by the federal government, resolving Texas’ violations of federal law to maintain adequate special education funding. 
One amendment by Senator Jane Nelson (R-Flower Mound) to add back in the gifted and talented allotment in the school finance formula succeeded.
Another amendment that succeeded was bringing back the small and midsize school district allotment that was repealed in the version of the bill which passed the House and the version which passed the Senate Education Committee.
Twenty-six Senators voted for the bill, two Senators, Brandon Creighton (R-Conroe) and Charles Schwertner (R-Georgetown), voted against the bill and three Senators, Paul Bettencourt (R-Houston), Angela Paxton (R-McKinney) and Bob Hall (R-Edgewood), abstained.
The bill now heads back to the House to see if they approve of the Senate’s changes, which is unlikely. It will then head to a conference committee of both House and Senate members to iron out the details.
The story will be updated with more details on the amended version of HB3 which received Senate passage when it gets released by the Texas Legislature.

Written by RA News staff.


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