School Finance & Property Tax Reform

School Finance and Property Tax Reform Task Force

The primary purpose of the School Finance and Property Tax Reform Task Force will be to carefully consider the advice of the Texas Supreme Court in the 2005 Neeley v. West Orange-Cove CISD ruling:

We remain convinced, however, as we were sixteen years ago, that defects in the structure of the public school finance system expose the system to constitutional challenge. Pouring more money into the system may forestall those challenges, but only for a time. They will repeat until the system is overhauled.

In order to finally end the self-defeating cycle of school finance litigation that has plagued the state for more than three decades, the Legislature must consider a fairer and more fiscally responsible source of revenue to fully fund public schools, as required by the state constitution. The first priority of the School Finance and Property Tax Reform Task Force will be to choose a new path for funding public education.

The 79th and 80th Legislatures appropriated billions to buy-down school districts’ maintenance & operations property tax rates. The 81st Legislature achieved administrative and systemic reforms to the property tax appraisal system. Despite these efforts, the school property tax remains the most imperative policy challenge facing the state. Property tax bills across the state continue to rise, highlighting the pernicious nature of the property tax and accelerating the next legal challenge to the school finance system.

Even as the next school finance suit against the state is brewing, property taxes are fundamentally the root of a growing property rights crisis in Texas, making homeownership unaffordable for many and creating a greater disincentive for business expansion among capital-intensive industries.

In addition to developing and recommending a long-term solution to school finance questions, the Task Force will also consider:

  • The state versus local responsibility for funding public schools;
  • The use of debt financing on public school finance and state finances;
  • The cost-shifting effect of certain tax exemptions; and
  • Changes to the franchise tax, the revenue from which accrues in part to the benefit of the Property Tax Relief Fund. [Changes to the margins tax will also be considered by the Economic and Workforce Development Task Force].