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Texas House passes school finance measure containing $4 billion in cuts

Posted Friday, Jun. 10, 2011

By Dave Montgomery

dmontgomery@star-telegram.com

AUSTIN – A revenue and school-finance measure that would implement $4 billion in state education cuts over the next two years won final passage in the Republican-controlled Texas House on Friday.

The measure, considered the top priority of the Legislature’s special session, now heads to the Senate. A final version of the bill will likely be crafted by a House-Senate Conference committee.

The Republican leadership fended off efforts to substantially retool the measure, which is essential to balancing the state budget and distributing education funds to more than 1,000 school districts.

At the end of the regular session, a version of the bill was brought down in a filibuster by Sen. Wendy Davis, D-Fort Worth, forcing lawmakers into overtime to resurrect the measure.

House members debated for more than 16 hours before giving the measure approval preliminary approval shortly after 2 a.m. Final approval came early Friday afternoon on a vote of 83-62.

SB1, which cleared the Senate last week, would generate nearly $3.6 billion in nontax revenue -- primarily through deferrals, regulatory changes and other measures -- to balance the $172.3 billion two-year budget that lawmakers passed during the closing days of the regular session that ended May 30.

The bill's most controversial feature is a school-finance component needed to carry out the $4 billion in education cuts mandated by the 2012-13 budget. School districts in Tarrant County would lose $260 million over the next two years. The Fort Worth district would lose nearly $40 million.

Arlington and Keller would lose about $28.9 million each.

An amendment by Rep. Diane Patrick, R-Arlington, will require a review of the school funding mechnism by the 2013 Legislature but will not affect the $4 billion in reductions for the next biennium.

Although the most emotional debate focused on education, the Republican-led House also rebuffed Gov. Rick Perry by refusing to jettison a provision designed to toughen sales-tax collection requirements on Internet retailers who do business in Texas. The provision is similar to legislation that Perry recently vetoed.

House members also gave final approval to a companion appropriations measure, SB2.

The slashed spending on schools spawned protests at the Capitol. The reduced funding has forced cutbacks and layoffs at local districts. Lawmakers from rural and low-property wealth districts said their schools would take a disproportionate hit.

House Democrats, echoing Davis' filibuster, reiterated that cutting funding fails to account for the steady growth in enrollment and could erode the quality of education.

Rep. Helen Giddings, D-Dallas, called the budget "a major attack on our students and teachers," saying the cuts threaten to "cripple a whole generation of young people."

GOP leaders defended the budget, saying that lawmakers have worked hard to protect education funding despite the economic restraints of a massive budget shortfall. House Education Chairman Rob Eissler, R-The Woodlands, said that overall education funding is higher than that approved by the 2009 Legislature.

"It's not how much you spend," he said. "It's how well you spend it."

Sales-tax issue

House members defeated Democratic amendments to eliminate the cuts and restore the state's Foundation School Program to its current $42.6 billion, the amount the Legislative Budget Board says it needs to help schools deal with enrollment growth and decreased property tax revenue at the local level.

The Foundation School Program is the official name of the state's school financing mechanism.

But Democrats scored a victory with a successful amendment by Rep. Donna Howard, D-Austin, to use surplus revenue from the state's so-called rainy-day fund to help school districts offset up to $2.2 billion in reduced funding. The provision would kick in if the amount of revenue in the fund -- which is supported by oil and gas revenue -- exceeds the $6.5 billion now projected to be available in the next biennium.

Many of the proposed amendments from Republicans centered on the array of arcane regulatory provisions in the so-called fiscal matters bill.

The GOP-led chamber bucked a written request by Perry to kill a provision that would require online retailers such as Amazon.com to charge sales taxes in Texas.

In a letter to House members, Perry said the provision "risks significant unintended consequences, including a loss of Texas job opportunities and weakening of our state's competitive advantage.

"I will not put Texas job creation efforts in jeopardy, particularly as we continue to feel the effects of a challenging national economy."

Comptroller Susan Combs sent Amazon.com a bill for $269 million for uncollected sales tax because one of its subsidiaries operates a warehouse in Irving. Amazon balked and Perry publicly backed the company over Combs in the matter.

Rep. Bill Zedler, R-Arlington, offered a Perry-backed amendment to remove the provision, but House members voted 106-34 to defeat it. Zedler said that a company shouldn't be charged sales taxes because of the "simple presence of a distribution center or a headquarters." The amendment was supported by Texans for Fiscal Responsibility and the Texas Public Policy Foundation.

The biggest chunk of revenue in the fiscal matters bill -- $2.3 billion -- would come from a one-month deferral of Foundation School Program payments in 2013. Other savings and revenue-generators come from accelerating or delaying taxes, lowering discounts, leasing state-owned parking places to individuals, reducing the state subsidy for juror pay, and expediting the sales of surplus or salvaging property. The bill would also increase registration fees for some lobbyists from $500 to $750, according to the House Research Organization.

This report includes material from the Star-Telegram archives.

Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-476-4294

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