MARK YUDOF IS THE CHANCELLOR OF the University of Texas, but he also happens to be a thirty-year veteran of the Texas school finance wars. As a young UT law professor, he was co-counsel in a case challenging Texas’s method of funding its public schools that went all the way to the U.S. Supreme Court, where his side lost. So he knows what he’s talking about when he compares the continuing saga of school finance with a Russian novel: “It’s long, tedious, and everybody dies in the end.”
That’s just what the characters in the current school finance drama are afraid of, from Governor Rick Perry to anxious legislators, school superintendents, and taxpayers. As Perry weighs whether to call the Legislature into special session this spring, the story of Texas schools seems once again to be hurtling toward doomsday. The Robin Hood funding scheme, adopted in 1993, which achieved equity between rich and poor school districts by redistributing the former’s tax dollars to the latter, has reached the end of its useful life. Local property taxes have skyrocketed, and lawmakers of both parties have been content to boast about not raising state taxes while forcing local taxpayers to carry more and more of the burden of paying for public schools. As a result, the state’s share of the cost of education has declined from 52 percent in 1980 to 38 percent today. More than half of Texas’s 1,041 school districts are within one cent of the maximum tax rate allowed by state law and have no way to pay their bills except to slash programs and personnel. Dozens of school districts, representing around a quarter of Texas’ students, have turned to the courts for immediate relief in a lawsuit scheduled to go to trial in July.
School districts are not the only ones in mortal danger. Failure to fix the problem could have fatal political consequences for Perry, who has pledged to get rid of Robin Hood, which targets the state’s wealthiest—and often the most staunchly Republican—districts. But finding the right fix brings on other hazards, such as locating a source of money to replace the $1.1 billion the Robin Hood districts are currently contributing to poor districts. Perry’s leadership and vision, which have not previously been his strong suits, will be seriously tested, and the stakes for the governor could not be higher: U.S. senator Kay Bailey Hutchison and Comptroller Carole Keeton Strayhorn are considering Republican primary challenges against him in 2006. Already the issue has sharply defined Perry’s priorities: While he was willing to keep the Legislature in special session for as long as it took to produce a Republican congressional redistricting plan last summer and fall, he has said he will call a special session on school finance if he sees a GOP consensus on the issue—as though it will turn up on its own, perhaps wedged between the cushions of a Capitol office sofa.
School finance also looms as the biggest gut check for the Republican-majority Legislature and its leaders, Lieutenant Governor David Dewhurst and House Speaker Tom Craddick. The issue brings their no-tax ideology into conflict with their obligation to govern. It will also test their ability to work with Democrats. If, as expected, the school finance fix requires amending the state constitution, the necessary two-thirds majorities cannot be achieved without the votes of Democrats, who are still seething over the bruising mid-census congressional redistricting battle. The Republicans who scathingly denounced the Robin Hood scheme to their political advantage during campaign season must now answer a difficult question: What’s the best alternative?
So far the three GOP leaders have been unable to reach an agreement on two fundamental questions. The first is whether to shoot for a “little fix” that would amount to a patch on Robin Hood’s leaky tires or to go for a “big fix” that would not only shift the tax burden for public education from the local level to the state level and from property to other sources but also try to guarantee a better education for Texas students. The second is how to pay for a plan that will cost anywhere from a little-fix $2 billion a year to a great-big-fix $10 billion. The solution will not include an income tax, but it could envision raising the cigarette tax, expanding or increasing the sales tax, legalizing and taxing video lottery terminals at racetracks, or instituting a business activity tax or a statewide tax on business property. Any of the above, with the possible exception of a cigarette tax, would encounter fierce resistance. As Steve Ogden, the new chairman of the powerful Senate Finance Committee and a plainspoken Republican from Bryan puts it, “There are certain groups whose ox is going to get gored.”
Senate leaders are ready to advance a plan adopted by that chamber during the regular session, which slashes property taxes in half and raises and expands the sales tax. Perry, however, has maintained a devout silence on possible ways of raising new revenue to replace the Robin Hood funds. His hard-driving chief of staff, Mike Toomey, has been lobbying lawmakers to adopt a split property-tax roll, with business property taxed by the state and residential property taxed by local districts. This solution, which would require the Legislature and the voters to override a constitutional prohibition against statewide property taxes, has met with a tepid response from lawmakers and violent opposition from business interests. Toomey also wants to require a vote of the people before any local taxing body—not just school districts but also cities, counties, hospital districts, and the like—can raise additional revenue. This too will be hotly contested.
The concern among educational leaders is that the political risks will outweigh the necessity to