The final price tag of the Legislature’s plan to increase funding for schools and to lower property tax rates came to an eye-popping $11.6 billion for the two-year state budgeting period.
Lawmakers barely blinked at the new cost of the bill, which had only been revealed to them less than 24 hours earlier, as it unanimously sailed through both chambers with cheers and celebration.
Only a couple of lawmakers pointed out that the latest version of the bill gets more expensive every year, and the legislation doesn’t provide for a new revenue source to keep up with the growing cost. But despite their stated concerns, they voted for the bill anyway.
“My concern about this bill when it came to the floor was that I didn’t know what it was going to cost,” said Sen. Bob Hall, R-Edgewood, on Saturday, referring to his initial vote against the bill when an earlier version was presented to the Senate. “Now that I do know, I’m still concerned about it. As much as I like what we’re doing, I think we’re spending far more on it than we should.
“But it is what it is,” he said.
In the next two-year budget cycle, the cost of the legislation will grow from $11.6 billion to $13.4 billion.
On a yearly basis, it grows from $5.45 billion in 2020 to almost $7 billion by 2024, according to the Legislative Budget Board.
The reason for the growing cost is because lawmakers, pressed by Gov. Greg Abbott, included a 2.5% cap on school district property tax collection growth. The effect of this cap means that as property values grow, a district has to lower tax rates to offset larger tax increases.
However, the state is on the hook to keep school districts whole, so as local tax contributions decrease, the Legislature must increase how much state aid goes toward funding public education.
“I have serious reservations about the tax component of this bill because there is no sustainability,” said Rep. Trey Martinez Fischer, D-San Antonio. “I’m opposed to that sort of irresponsible financial management.”
Martinez Fischer said he voted for the bill because he is supportive of the parts of it that increase pay for teachers and make wholesale changes to the way dollars are doled out to schools.
But he said the Legislature didn’t finish the job, and will have to revisit the issue during the next session.
“We own this now,” he said. “Nobody can run from the responsibility to fund this in two years.”
His concerns were shared by Rep. Roland Gutierrez, D-San Antonio, who called the legislation a “lofty bill.” Gutierrez was heckled by his fellow legislators as he raised objections.
“We need to be looking at new revenue,” he said before he voted in favor of it. “We need to figure out how to pay for this bill.”
Rep. Dan Huberty, R-Humble, who authored the school bill, told members the money is there.
However, some of the revenue identified to cover the cost is a one-time grab that might not be available in the future years.
Initially, lawmakers balancing the cost of the school and property tax bill were working with about $9 billion in total — the amount of new revenue identified at the beginning of the year from a strong economy.
Later, the state comptroller announced updated revenue forecasts increased that by about $518 million.
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Some of that additional cost came from new money from online sales tax collections — about $550 million — and using a budgeting trick to claim some additional money from a state fund that’s true purpose is supposed to be for grants to reduce vehicle emissions.
The state is also counting on $600 million more per biennium that would be contingent on voter approval. That money would come from siphoning off a larger portion of the state’s Permanent School Fund — a large account that uses investment earnings for public education.
“And of course, being fiscally responsible, we’ll find the rest through our general revenue appropriation,” Huberty said.
Former House Speaker Joe Straus also piped in on Saturday to congratulate legislators for passing the school funding bill — something he fought for during his years in office. But he similarly cast doubt on whether the state could keep up with the cost.
“This school finance bill certainly provides property tax relief,” he wrote in a Facebook post. “Hopefully, the Texas economy will continue to perform strongly enough to support and sustain the ambitious efforts in this legislation to contain property tax rates.”
Eva De Luna Castro, a state budget analyst for the left-leaning Center for Public Policy Priorities in Austin, said the state was using “smoke and mirrors” to cobble together a workable budget to fund the legislation.
She said it’s unlikely the state can continue to fund the growing cost of the bill without finding a separate revenue source or without being forced to make cuts in future years.
“They chose to make this investment in public schools,” she said. “Now they need to choose what growing revenue sources they’re going to find to keep up with it.”