The Tax Plan: Will It Cost More Than Advertised?

With the special session exactly 11 days from opening, the Perry/Sharp/TTRC tax plan is drawing more and more criticism:

A new tax plan pushed by Gov. Rick Perry could cost the state much more than advertised — likely hundreds of millions of dollars more — because it does not account for key components of the Texas school finance system.That’s the conclusion of several school finance experts, who say that while the plan was designed as a way to address a Texas Supreme Court mandate, it could create even more legal headaches unless the state comes up with more money to fund it.

The manner in which the new proposal delivers extra taxing authority to local independent school districts is where some experts believe the plan could dig a massive crater in the state budget.
Under the plan, local M&O property tax rates will go down, but ISDs will get extra revenue through an expansion of business and tobacco taxes, plus part of the $4.2 billion budget surplus.

However, the play would reportedly “change the dymanic” between state and local taxes to the point it would likely create a bigger draw on state resources, says Peggy Venable of the conservative grop Americans for Prosperity:

“There’s no question about it. … This is going to be a tax increase if they don’t put in [more] protections,” she said.

Also:

The problem is a technical one that arises because the Sharp-Perry plan must also work within the confines of the existing Robin Hood share-the-wealth school finance system, which would remain in place under the proposal.

The new TTRC plan would allow district a great deal more discretion to raise rates, but doesn’t identify additional sources for matching funds for property poor districts. This is important because under Robin Hood, the state must provide more funds to property poor districts when they raise their tax rates.
No doubt in the coming days there will be many more analysis out on the TTRC’s tax plan. Can’t wait for those.

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