Texas Supreme Court Rules Property Tax Unconstitutional
By APRIL CASTRO
Associated Press Writer
AUSTIN (AP) -- Texas school districts illegally tax property owners to pay for public education and the state must find a new way to fund schools by June 1 or classrooms will remain closed in the fall, the Texas Supreme Court ruled Tuesday. Texas' highest civil court ruled that the property taxes for schools have become an unconstitutional statewide property tax and charged lawmakers with repairing the $30 billion funding system. State funding would be stopped if the deadline isn't met.
The nine-member Republican panel agreed 7-1 with one of three arguments in a lawsuit brought against the state by hundreds of school districts, but found the system meets constitutional requirements for "adequate education" and equitable facilities funding. Justice Scott Brister dissented and Justice Don Willett did not participate.
June 1 is an extension of an earlier court deadline set in the long-running case, and one lawmaker said it this one is much more serious.
"This time the Supreme Court has ruled. There is no back door," said Texas Rep. Dan Branch, R-Dallas, a member of the House Public Education Committee. "This deadline is a real, hard, firm deadline. At that point, you can't finance schools the same way, you have to make the system constitutional, otherwise you run the risk of not being able to open schools in August."
The court declined to offer its own solution, pushing the issue back to lawmakers.
Republican Gov. Rick Perry praised the ruling and said he plans to call lawmakers back to Austin to take up the issue in a special legislative session "at an appropriate time before that deadline." The Legislature has failed to remedy the system during the last two regular sessions and three 30-day special sessions called by Perry. "I'm also pleased to see that the court agreed with a position that I have long advocated: simply pouring more money into the same system will not alleviate the property tax problem," Perry said."Our entire tax system needs substantial reform to make it fair, more modern and that will ensure schools have a reliable stream of revenue."
The court has been considering the case for months on appeal from a district court in Austin. Property-rich and poor districts sued, claiming the method for funding education did not meet requirements set in the state constitution.
State District Judge John Dietz in September 2004 agreed. He ordered that the three problems get repaired or the state would have to halt funding for schools Oct. 1. That deadline was suspended pending the high court ruling.
The state appealed to the Supreme Court, arguing that changes to the system should be made by the Legislature, not the courts.
"The court recognized -- as all Texans recognize -- that we can and should do a better job of educating students in Texas," said Texas Attorney General Greg Abbott, whose office represented the state in the case. "But, just because we can do a better job does not mean that the job being done now is unconstitutional."
The Supreme Court agreed with the plaintiffs' argument that the system is unconstitutional because so many school districts are forced to tax property owners at the maximum limit of $1.50 per $100 in property value. That amounts to a statewide property tax because districts don't have room to set their own rates, the high court ruled.
Districts argued that to fund all state and federal education mandates -- such as the 22-student per class limit and minimum teacher salaries -- they must tax at the legal limit. The property tax cap, they said, had become both a minimum and a maximum rate.
Money for the Texas school system comes primarily from property taxes and a loophole-ridden franchise tax. The business tax probably will be overhauled to make more entities pay.
While the court said that state spending on education satisfies the constitutional requirements of an "adequate" education, the ruling cast doubt on the future of the system if there is not "increased funding, improved efficiencies, or better methods of education."
"The court is obviously worried about the future of the system," said Scott McCown, a retired state judge whose decisions helped shape Texas' school funding system.
Perry has appointed former comptroller John Sharp, a Democrat and former political rival, to head a commission that will recommend how to restructure the tax system that pays for schools. It met for the first time Monday.
Copyright 2005 by The Associated Press. All Rights Reserved.
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