For many years property taxes have been a source of conversation and consternation in Texas. Even though overall Texas ranks among the lowest taxing states of the union, property tax remains a sore spot with almost all citizens. In Texas, property taxes have risen from near the lowest in the United States in the mid-1950's to among the top 3-4 in the U.S. today.
Property tax is the primary way Texans support public education. In all, property taxes levied in the various districts and counties throughout the state amount to a little over $60 billion. A few frustrated members of the Legislature have suggested we abolish the property tax to support education and replace it with an increased sales tax. The problem with this is that in order to replace the money not raised by ad valorem taxes, the required increase in the sales tax would be upward of 15% on each item you purchase. Most exemptions, such as diapers and groceries, would be eliminated. Some, mainly property owners, argue this would be preferable to the current system, which in effect taxes people repeatedly on their homes and businesses. Again, the problem with this system is that a sales tax is regressive and hits those on limited incomes much harder than those with large incomes.
The ad valorem tax used to support public education has been under attack in the court system since the 1960's, beginning with the Edgewood case filed in federal court. The federal appellant court, including the Supreme Court, ruled not that the tax system was fair, but that it was not so unfair that it had reached the point of unconstitutionality. The appellant courts followed with a warning that failure to address the problem could very likely involve federal court intervention in the future.
The Edgewood case in the federal system was followed by a case reaching the Texas Supreme Court in which the system of funding education was deemed to have run afoul of the Texas Constitution; specifically, the provision which required the state to offer all citizens a quality or decent education. The basic problem with the tax is that it unfairly treats and punishes children who have the misfortune to live with their parents in poor districts or counties. The current system provides unbalanced amounts available to educate children.
As an example, citizens of school districts like Mount Belvieu enjoy supporting a quality system of education at a relatively low tax rate because they are fortunate enough to have salt domes within the boundaries of the district filled with natural gas which periodically can be taxed. The gas is not produced in the district, but simply is taxed as it passes through the storage in the district on its way primarily to the Northeastern part of the United States. Other districts of low property wealth force citizens to pay a higher tax rate and devote a greater effort to support public education, resulting in even lower amounts available to deliver education to their children. In short, the current system is, was and probably will be unfair.
A simple solution, unworkable in Texas, is to support public education with an income tax. It is not likely the people of Texas will in the near future vote for a constitutional amendment which allows an income tax, even though it would totally replace the ad valorem tax on their homes and businesses.
There is another solution which would absolutely resolve the inequity of the current property tax system. As Chairman of the Senate Education Committee I proposed it; Ann Richards flirted with it very briefly. Sadly, it was grossly misunderstood by the press who failed to note in their reports that the proposed tax was not to be added to the local tax, but to replace it. As a result, the idea was quickly rejected by Governor Ann Richards.
The proposal would have preserved only local taxes dedicated to paying off bonded indebtedness. Thereafter, a statewide tax at a uniform rate per $100 valuation would have been levied on all property within the state. Then money would have been placed in the state treasury and allocated to each district based on the number of pupils. At the time of my proposal, a dollar per $100 tax rate would have raised slightly more than the differing local tax rates. And, it would have lowered the tax rate for half of the taxpayers in the state.
Such a system would end forever the lawsuits alleging the system of raising taxes and the allocation of state funds for education as unfair.
I have long believed sailboat racing among sailors with the same class vessels is the fairest sporting competition existing today. All of the sailors have to have the same amount of wind, use relatively the same amount of sails, and maneuver the same kind of boat. Thus the winning boat depends primarily on the skill of those who operate it. The same should be true of school districts throughout Texas. If every district had the same resources available per student, Texans would quickly learn which districts make efficient use of their money and produce the right result for our children. Maybe it is time for all taxpayers in all school districts in this state to get in the same boat.