On April 17 the Texas Legislature will return to Austin to draft a school finance reform plan that will satisfy the constitutional deficiency cited by the Texas Supreme Court. Legislators are obligated to create a means where local school boards have "meaningful discretion" to set a tax rate below the current $1.50 property tax cap. The Supreme Court ruled that not having discretion to set a lower rate, while still having to satisfy mandated education standards, created a funding method which was indistinguishable from a statewide property tax. A statewide property tax is prohibited by our Texas Constitution.


My goals for school finance reform have been and remain substantial local property tax reduction and an increase of the share of public education costs paid by the State of Texas. I have been willing to look at multiple alternatives to reach this goal. The only option I have emphatically ruled out from the start is a state income tax.


The latest plan that lawmakers are evaluating is the one proposed by Gov. Rick Perry and the Texas Tax Reform Commission, led by former Texas Comptroller of Public Accounts John Sharp. I have been soliciting feedback from the residents of House District 55 on all of the school finance reform options and I would welcome input on what the governor has proposed.


The Perry/Sharp proposal calls for lowering the amount of local property taxes paid to support public school maintenance and operation by 1/3rd through replacement revenue. By the 2006-2007 school year no school district in the state may set a property tax rate above $1.06 per $100 of property value without voter approval. The absolute limit on local property taxes that school districts may not exceed would be lowered from the current $1.50 to $1.30.


The revenue to replace the property taxes would come from three sources. First, the Perry/Sharp plan calls for eliminating the current business franchise tax system and replacing it with a tax on gross business margins. Sharp states that just one business in 16 pays under the current system and that the goal of the commission was a lowered rate spread among more payers. The tax rate under the proposed plan would be set at 1 percent for most businesses and one-half percent for retailers and wholesalers. Businesses generating less than $300,000 in gross sales would be exempt from the tax. Businesses subject to the tax would be able to deduct either employee compensation costs (up to $300,00 per employee) or purchased goods.


Loopholes in the existing business tax structure that facilitated avoiding the franchise tax would be closed under the proposed gross business margins tax.


The Perry/Sharp proposal also calls for a $1 increase in the cigarette tax and using the presumptive (blue book) value of a used vehicle as the basis for calculating motor vehicle sales taxes.


The current sales tax rate for all other goods is not proposed to change, nor would other products or services be subjected to sales taxation.


As I review this and other proposals, I will give strong consideration to the input I receive from Central Texans. There exists now an historic chance to make major improvements in our current school finance system and I am looking forward to getting back to work.


We need, as a state, to move towards a system of funding for school finance that is fair to all payers, meshes with our modern economy, and provides a steady revenue stream to educate young Texans.


This has to be done not just to satisfy the Texas Supreme Court. Rather, it must be accomplished because the generation going through our school system today will determine what kind of state we live in tomorrow. Children are 20 percent of our population, but they are 100 percent of our future.


Let's get to work. We can get this done.