“Education is our future and our highest priority.”–Rick Perry
This statement came from a Rick Perry campaign ad that debuted on September 16, 2006 during the 2006 Texas gubernatorial campaign. In the ad, embedded below, you will see Governor Perry in a school library reciting all of the legislative accomplishments of the previous session, including pay raises for teachers, more funding for Texas schools, and directives from the legislature to spend more on classroom instruction.
However, four months earlier in May 2006, Rick Perry received a letter from Carole Keeton Strayhorn, the then Texas Comptroller of Public Accounts, stating that the tax plan Governor Perry recommended to the state legislature was “fiscally irresponsible.” Strayhorn warned the governor of deep shortfalls to the state budget and education funding.
“The property tax relief contained in the bill, if it can be financed past 2008, will be quickly eroded by rising property values, and increases in local tax rates forced on local school districts struggling to keep up with rising costs. In as little as five years, the state could be right back in court.”
What happened in 2006?
In 2006, Governor Perry convinced the state legislature to lower property taxes by lowering and capping the maximum taxation level that could be put forth by Texas independent school districts. School tax rates would be lowered from their then cap of $1.50 to $1.33 in the first year and $1.04 in the second year. To replace this funding, a major revenue source for school districts, Governor Perry promised that money lost from the tax compression would be recouped by a state business tax (business margins tax). After much debate and consideration, a legislative special session was called to urge the Texas legislature to pass a comprehensive school finance reform package that included the property tax compression, the business margins tax, and an incentive pay program for teacher. Overall, the package provided a tax reduction of $7 billion over three years to employers and property owners. The package of bills drew broad support from the business community.
The elements of the tax compression were designed to alleviate high property taxes while giving Rick Perry campaign sound bytes for his run for re-election. Perry celebrated the legislature’s support in his debates with Strayhorn and in his campaign ads of the year. Meanwhile, school districts began to brace for the financial blow caused by tax rate decompression.
By conservative estimates by Comptroller Strayhorn (and gubernatorial candidate), school districts would be impacted by ongoing deficits estimated as follow:
Unfortunately, Comptroller Strayhorn seems to have had crystal-ball accuracy when she made her predictions ……………………….
Entering the 82nd legislative session, the state of Texas was forced to solve a $27 billion dollar deficit. In their efforts to balance the state budget, the legislature took money out of the Rainy Day Fund to pay debts from the 81st legislative session and then examined state programs for cuts. Education took a $5.4 billion dollar cut in funding and was not allotted dollars to account for student growth. 160,000 students will enter Texas schools over the next two years. As such, many school districts in Texas are looking for alternate sources of revenue through Tax Rate Elections and revenue shifting to account for the cuts from the state.
In 2006, Rick Perry worked to protect businesses while urging the legislature to pass bills that ultimately hurt education as was warned to him prior to calling special session to “reform” education. The reality is that education was not reformed, it was stripped of funding in a structural deficit leaving local tax payers to recover the losses. Rick Perry claimed to lower property taxes for citizens in 2006; I think the people of Everman, Cisco, Canutillo, Pflugerville, and Birdville ISD would disagree.