Information On The Spending Cap & Pondering Why It Wasn’t Part Of The Special Session

The Center For Public Policy Priorities has a great fact sheet up on the “Spending Cap” and why it will have to be lifted to pay for the Texas Tax Reform Commission’s massive property tax cuts.

A couple of important notes:

How Would the Spending Limit Affect the Property Tax Cuts Adopted in the Special Session?

HB 1, the school-finance bill passed in the recent special session, requires school maintenance-and-operations (M&O) tax rates to be compressed by one-third in fiscal 2008, i.e., from $1.50 per $100 in property value to $1.00. Starting in 2009, the commissioner of education will calculate the compression percentage based on the amount of state funds in the property tax relief fund, which receives the revenue raised by the tax changes made in the special session, “or from another funding source available for school district property tax relief.”

The cost of the property tax cuts in HB 1 was estimated at the time of passage to be $13.4 billion for the 2008-09 biennium. A more recent estimate by the Speaker’s Office shows a cost of $11.4 billion, apparently based on higher-than-expected property values, which increase local tax revenue, so decrease the need for state matching aid. So even if state spending were continued only at its current level, without adjustment for enrollment and caseload growth or the increased costs of providing services, the additional cost of replacing local school property taxes with new state revenue would be more than the amount permitted to be spent by the constitutional limit. Of course, there are also many unmet needs that should be funded in the 2008-09 budget.

One would think that the Legislature would have worried about this back when they actually passed this package of bills during the special session. It seems as though it would have been appropriate to tie-in legislation that would have lifted the spending cap as a part of this package. It’ll be a lot more difficult to get the spending cap lifted during the regular session than it would have in the special session. In the special session, legislators seemed to have been of the mindset of “do what it takes” so a state district court judge wouldn’t take over administration of Texas Public Schools.

In the present environment, however (especially with hawks like Dan Patrick in the Lege) this will be much, much more difficult.

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