House Race Becomes Battle in Push for Public School Tax System Overhaul

December 6, 2007

Capitol Inside

Mike Hailey

A state House race that’s only four days old has already become a testing ground for a proposal that would dramatically change the way the public education is funded in Texas.

State Rep. Phil King of Weatherford sparked a debate that promises to produce fireworks all across Texas when he revealed that he and about 30 other state legislators had been working on a plan to replace property taxes with consumption taxes as the chief source of public school funding.

King dropped the bombshell at a fundraiser in Decatur a few days before Weatherford Mayor Joe Tison announced this week as a Republican primary candidate for the House District 61 seat that the incumbent is seeking again next year. The surprising admission on a new push to overhaul the state’s school financing system has ignited a war of words in the Tison-King race on a topic that has the potential to become a top-priority issue in all of the contested legislative contests across Texas in 2008.

Tison, a former school superintendent and high school principal, declared Thursday that a consumption tax that King favors would hit middle-class families and small business hardest. Tison asserted that property tax savings under the plan that King had floated would be more than offset by higher costs for food, drugs, medical treatment, car repairs, utility bills and other items that are currently exempt from state and local sales taxes.

Tison, who was recruited for the House race by the Texas Parent PAC and other education advocates, called the proposed school tax shift “another example of how politicians initiate something without asking their local constituents what effect it has on their schools, their government, or their living standards.” Tison challenged King to name other members of the group that’s been discussing the possibility of converting to consumption taxes for public school funding

But King upped the ante instead of backing off by proposing a constitutional amendment designed to abolish the school maintenance and operations portion of taxes that are paid on property and replenish lost revenues with a state consumption tax.

King isn’t the first state lawmaker to advocate a shift to consumption taxes as the primary funding source for public education. Republican Talmadge Heflin, who chaired the Appropriations Committee before losing his re-election bid in 2004, was a longtime proponent of higher consumption taxes for school funding in exchange for significant reductions in taxes on property. Conservative organizations such as the Texas Public Policy Foundation have argued in favor of consumption taxes as an alternative to levies on property to finance public schools in Texas.

Conservatives have made the same basic case for consumption taxes at the national level as a way to reduce or to even put an end to the federal government’s reliance on income taxes. But the push for such as shift in Austin has stalled in times past after opponents have branded consumption taxes as regressive and argued that exemptions on food and medicine would have to be eliminated before a sufficient amount of revenue could be generated. Despite past resistance, conservatives such as Grover Norquist of the Americans for Tax Reform at the national level and Michael Quinn Sullivan of the Texans for Fiscal Responsibility here in the state have stepped up their efforts as taxes on income and property seem to become more unpopular with many of the people who pay them each year.

But the meetings that King referred to at the fundraiser are the first sign of a concerted effort among lawmakers being under way at the Capitol on a major school finance proposal since the Legislature approved a public education funding plan that revolved on a new state business tax in a special session in early 2006.

Sullivan praised King for “jump-starting” the discussion about a shift from property to consumption taxes to fund Texas schools. “Texans know the time is long overdue to rip the poisonous weed of property taxes out of the state’s economic garden,” Sullivan said.

But King’s critics contend that a major expansion of the sales tax base – even without exemptions on food and medicine – would not bring in enough additional revenue to make up for the funds that would be lost if M&O taxes were eliminated. The state raised more than $17 billion for school maintenance and operations from property taxes in 2005. Property taxes accounted for about 44 percent of the total state and local tax bite in Texas that year while 30 percent came from sales taxes. While conservatives contend that consumption taxes are a funding source that’s more stable, transparent and fair, some Democrats see the push to increase them as a step in the direction of a school vouchers plan.

With Tison expecting some degree of crossover support from Democrats and independent voters in the GOP primary election next year, King might see the tax shift plan as an issue to help energize the support he has among more conservative Republican voters in his bid for a sixth term.

While King and Tison battle for the GOP nomination in HD 61, Democrat Chuck Randolph of Decatur is considering a campaign for the seat as well. No other Democrats are in the running so far in the race for King’s seat in a district that covers Parker Wise counties west of the Dallas-Fort Worth area.