After several failed attempts, the elected members of the legislature needed to demonstrate that we could lead.The leadership of Lieutenant Governor David Dewhurst was also essential.Without his steadfast determination that we improve funding for our schools in addition to cutting taxes, it probably would not have happened.Getting from a distraught and divided Senate on HB 1 to passing it unanimously on the Senate floor and 136 - 8 in the House were really gratifying moments for me.
As chairman of the Senate Finance Committee, I was in a unique position during the special session.All five bills covering Governor Rick Perry's original proposals for property tax reduction were heard in my committee.Changes to the bills that occurred in Senate Finance included a school property tax cut to $1.00 in 2008, a $2,000/year teacher pay raise, over $300 million in new money for high schools, and the nation's largest state-funded merit pay program for teachers.The House bills were made better by my committee's effort, and I'm grateful to the members.
Major school property tax cuts were a critical objective of this special session for two reasons: first, to help satisfy a Texas Supreme Court order to change the system by June 1, and second, to address the pressing need for property tax relief across our state. This goal was accomplished.School maintenance and operationtax rates will be reduced between 9 and 11 percent on this year's tax bills and an additional 24 percent in 2007.This could mean a one-third tax cut in two years.
After the tax cuts, local school boards have the authority to raise maintenance and operation taxes up to 4 cents per $100 valuation this year.Beyond that, additional increases must be approved by local voters.In addition, my committee developed ground-breaking legislation that will allow property-wealthy districts to keep more of their local tax revenue while also guaranteeing more equitable funding to less wealthy districts.This is a dramatic and welcome improvement to "Robin Hood".
Reforming the state's business tax was important to me for reasons of public policy and basic fairness.The old franchise tax allowed many businesses, including my own, to legally opt out of paying a business tax.We fixed this by creating a broad-based, low-rate tax that will cover most large businesses effective in 2007.Sole proprietorships, general partnerships, and businesses grossing less than $300,000 per year, are exempt from the new business tax.
Other tax changes included revising the calculation of sales tax on used cars and raising the cigarette tax by $1 per pack effective January 1, 2007.At the end of the day,this means state tax revenues will now fund about half of public education, up from approximately 38 percent today.
A lot of credit is due to the hard-working people of Texas.Their efforts have made our economy grow and this growth created the largest budget surplus in Texas history.This surplus will be returned to Texas property owners through tax cuts, and sent to our schools with increased funding.
It's always an honor to serve the constituents of Senate District 5.Property taxes have been cut dramatically, the business tax is fairer and more broad-based, teachers will receive a significant pay raise, and we funded the most equitable school finance system Texas has ever had.These are noteworthy achievements and I'm very proud of the work our legislature did.