September 17, 2018
When I was a kid, my father would condemn some people, like politicians, who took contradictory or hypocritical positions. He’d say, “That guy is talking out of both sides of his mouth”.
That didn’t make sense to me when I was young, mainly because I couldn’t picture how you can speak without talking out of both sides of your mouth. You have to engage in some real contortions to talk out of only one side of your mouth.
Well, get ready, because this next session, when it comes to the budget, property taxes and retired teacher healthcare, you can expect Cirque de Soleil level contortions.
Some folks at the State Capitol talk a lot about reducing your property taxes. They act all heroic, but it’s the state that’s really the big problem. Yeah, they talk out of both sides of their mouth.
Last week, the Texas Education Agency reported on what it thinks will be its budget needs next session. Here’s the big news: TEA expects that local property taxpayers will be picking up an even-greater share of the cost of public schools, so TEA needs about $3.8 billion less in state money.
Keep that in mind when you hear promises of property tax relief. School property taxes account for more than half of your property tax bill, and the state is banking on your school property taxes going up as property values increase. That, in turn, saves the state money. Dickering with city and county tax rates makes it sounds like the Legislature is doing something to provide “relief,” but that approach will do very little to actually reduce your property taxes.
This isn’t new. The current budget (2018-2019) counted on increases in local property values of about 7% per year. The state’s share of the school funding formula at the end of this biennium will only be about 38% of the total. Under this latest proposal, it would drop into the lower 30’s by 2021.
Some folks have been tying themselves into knots to argue that the state is pulling its full weight, even claiming that the state should get credit for the billions of property tax dollars collected on the local level as part of Robin Hood.
They also argue that the fault for rising school property taxes lies at the feet of local school boards, not the Legislature. But the Legislature has created a complicated system that deters local school boards from lowering their tax rates and the state reaps the benefit.
Gov. Abbott has floated a plan to cap additional tax revenue that local school districts could raise at 2.5 percent. But if the state expects that property values will rise almost 7 percent each year over the next two years, how do we make up the difference? Does the Legislature put in about $4 billion more in state money? Or cut that amount from schools?
The Texas Commission on Public School Finance is supposed to offer a plan forward after months of hearings and debate. We’ll see.
Retired Teacher Healthcare
The Capitol is also filled with folks who can’t say enough about how they love our teachers and retired teachers. But talk is cheap.
The health care system for retired teachers, TRS-Care, has been in deep trouble for years.
The problem with TRS-Care is that our funding mechanism is based upon school payroll, which has increased about 3 percent a year, while health care costs have risen about 7.5 percent a year. That structural imbalance reached a crisis point two years ago and the system would have collapsed without the additional funding and the plan changes that were part of the 2017 legislation.
As part of that discussion, I pushed in the Senate Finance Committee to increase the state’s contribution to ensure an ongoing commitment rather than a one-time band-aid, which had been the Legislature’s M.O. over the years. In the end, the state contribution rate was increased from 1 percent to 1.25 percent, and I offered an amendment during the special session that would have used the supplemental funding to increase that percentage even more. But the majority in the Senate rejected that amendment.
This coming session, I’ll look to AT LEAST double the state’s contribution rate, which will cover the estimated $410 million shortfall. The state, not the retired teachers, should bear the cost of fixing this problem.
I believe we also need to increase the state’s contribution to the pension. A cost-of-living-adjustment isn’t possible until we improve the fiscal condition of the pension fund, and that, again, requires the state to step up and keep its promise to folks who have served our schoolchildren for decades.
That Time of Year
On a happier note, we’re less than a month away from another great Concert Under the Stars. This is my 13th annual concert and I’m hoping my biggest one yet. Austin’s own nationally rising star and Americana Music Awards winner, Shakey Graves will be playing for us. We’ll be dancing and enjoying great food and drink at Zilker Park. Get your tickets today!