Last November, the Texas Supreme Court ruled that the state's local property tax system, which pays for about 60 percent of the bill to operate its public schools, amounts to an unconstitutional statewide property tax. It gave the legislature a deadline of June 1 to agree to a new funding scheme.
The state's 1,031 school districts are allowed to tax up to $1.50 per $100 of property valuation to generate the local share of their funding. About half of the districts are at the cap, with many more just pennies away. The high court agreed with a lower court that because many districts must tax at the $1.50 limit to meet state education requirements, the system is unconstitutional “because the state leaves districts no meaningful discretion to tax below maximum rates.”
The problem is not easily fixed; the court's justices agreed that the public school finance system is structurally flawed. In the majority opinion, Justice Nathan Hecht wrote, “Pouring more money into the system may forestall ... challenges, but only for a time. They will repeat until the system is overhauled.”
The state's lawmakers have attempted, but failed, to fix the broken system during regular and special sessions. Following the court's decision, Gov. Rick Perry appointed a tax reform commission to make recommendations to the legislature prior to another special session, which is likely to convene in the early spring. Many legislators favor reducing the state's reliance on property taxes. State Rep. Chuck Hopson thinks that can be accomplished by raising cigarette, corporate, and sales taxes. Though bills he has sponsored to that effect in the past have been voted down, he's optimistic the legislature will succeed by June 1. “I don't want to be a part of a legislative body shutting the schools down,” he says.