It’s official — the Legislature on Saturday night granted final approval to two priority pieces of legislation that will pump billions of dollars into public schools and cap property tax revenue for local cities and counties.
The accomplishment represents a major victory for Gov. Greg Abbott and other top GOP leaders who campaigned on tax relief, but property owners won’t see a dramatic difference in their tax bills. Between House Bill 3 and Senate Bill 2, homeowners will see modest cuts to their school property tax rates and a cap placed on school districts, cities and counties that limits how much they can collect, which slows how fast tax bills can rise.
Under House Bill 3, teachers are getting pay raises — though how much will vary wildly depending on what district they work in and how much new money the district received because of funding changes. More money for teachers’ raises will be available through a statewide merit pay program.
Every school district in the state is getting more money next year than it did this year. For the first time ever, Texas is funding full-day prekindergarten for low-income families, and more money is being directed toward districts with needy students.
The action Saturday was the final step required before the bills head to Abbott, who has expressed eagerness to sign them into law.
Property tax legislation
Senate Bill 2, the property tax legislation, faced objections from a majority of Democrats and warnings from city and county leaders that the new tighter revenue cap would disrupt their local budgets.
The bill prevents cities and counties from increasing revenue more than 3.5% from the previous year, without an election to give voters final say. Currently, local governments can increase revenue up to 8% a year, without fear of an election.
Local officials strongly opposed the bill, saying 3.5% barely covers the cost of inflation and will hurt their ability to pay for public safety. Dallas Mayor Mike Rawlings has said the cap will prevent the city from expanding the police force by up to 100 officers — something constituents have demanded.
The bill authored by Sen. Paul Bettencourt, R-Houston, slows how fast taxes increase, but doesn’t cut bills. Tax cuts were ultimately funded in House Bill 3, the school funding bill.
School finance overhaul
This weekend was the first time school districts learned just how much they would get out of the school bill, which has evolved constantly through the past five months as House and Senate leaders negotiated the details.
Dallas ISD will get an increase of $508 per student under the Legislature’s finalized plan — which amounts to about $71 million in new money.
The school funding increase is about 5% more per student, and requires at least $21 million to be spent directly on salary increases. New money for schools can be used to fund programs, additional hires and other resources, in addition to the raises.
Dallas ISD tax rates would be lowered 11 cents per $100 of valuation in 2020 — which amounts to a property tax reduction of $211 for an average house in Dallas valued at $191,000. However, that tax cut could be minimized by the effects of value growth and other taxing entities that hike rates. The school tax rate would fall another 1 cent in 2021.
On Saturday evening, before casting their final votes, a couple lawmakers expressed concern that the state would not be able to fund the property tax increases included in the legislation, which will continue to grow more expensive.
“It’s going to cost $13.3 billion in two years, and we may not have all the money,” said Rep. Trey Martinez Fischer, a San Antonio Democrat.
Former House Speaker Joe Straus, who previously fought for school funding improvements, posted a statement on his Facebook page congratulating the Legislature for “an overall investment in public schools that is significant and needed.”
But his statement raised some skepticism about whether there’s adequate funding for the tax relief.
“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,” he wrote.
Before the vote, Humble Republican Rep. Dan Huberty, who authored the school bill, said he believes school districts and taxpayers will be happy.
“Their taxes are going down, and they’re getting more money than they had last session,” he said. “There may be some districts that say, ‘Well, I’m not getting as much money as somebody else,’ but we set the system up differently this time.”
He noted that the schools seeing the largest gains likely have higher levels of needy children.
“That’s why some urban districts may be getting more money than neighboring suburban districts,” he added.
“That’s just the way it is.”
The breakdown of school district allocations paints a clearer picture about pay raises employees can expect. For much of the legislative session, lawmakers pushed for across-the-board pay raises, and the Senate wanted to give every teacher in Texas $5,000. But the final bill bases pay raises on how much districts are getting.
It requires districts to use 30% of the new money they receive under the bill for pay raises.
For Dallas ISD, that amounts to about $21 million. Of that pay raise earmark, three-quarters has to be spent on the district’s 11,200 teachers, nurses, counselors and librarians.
That means on average those professionals can expect a raise of about $1,400, but districts aren’t required to give everyone the same raise and have been asked to give larger raises to teachers with more than six years of experience. The other 25 percent of the money for raises can be allocated to any full-time employee who is not an administrator.
“The pay raises will vary wildly,” said Monty Exter, a lobbyist for the Association of Texas Professional Educators. “Some districts aren’t getting a whole lot of new dollars.”
For example, Terrell County ISD, a small West Texas district with three schools, will see only a total district increase of $2,120 in 2020, a hike of $19 per student. Any pay increase for the district’s dozen or so teachers would come from that pot. But more money can be derived from the state’s merit pay program.
Lt. Gov. Dan Patrick stressed earlier this week that veteran teachers on average could receive about $4,000 in increased total compensation, a number that includes retirement increases.
Exter said while districts are required to use 30% of new money for salaries, there’s nothing stopping them from spending more for raises.
“The onus is on the local districts to do right by the teachers,” he said. “They asked for flexibility and for the Legislature to not simply pass down a raise they have to give. They got that flexibility, and now it’s incumbent on them to pay teachers appropriately.”
Under the bill, the state also drastically reduces “recapture,” which is better known as “Robin Hood” because the system reallocates local tax dollars collected from property-rich districts and sends them to property-poor districts.
Dallas ISD currently sends $186 million in local property taxes back to the state to be reallocated. That number drops to $12 million in 2020.