Texas Supreme Court Says Property Tax Unconstitutional

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The Texas Supreme Court declared Tuesday that the property tax system that supports the state's public schools is unconstitutional, and it gave the Legislature until June 1 to come up with a new way to pay for education.

Texas lawmakers have been struggling with the question of school finances for more than a decade, and the latest ruling adds urgency to the dispute.

Money for the $30 billion Texas school system comes primarily from local property taxes and franchise taxes. But both rich and poor school districts contend the system is unfair.

The high court found that overall school funding is adequate and that rich and poor districts have equal access to money. But the justices ruled 7-1 that the funding system amounts to a statewide property tax, which is unconstitutional in Texas.

The plaintiffs argued that the state contribution for local education is insufficient and that in order to meet all state and federal education mandates — such as the 22-student per class limit and minimum teacher salaries — they must tax at the limit prescribed in Texas law. That, they said, amounts to a single statewide property tax.

The high court did not order state government to spend more money on local education, and declined to offer its own solution.

However, the ruling does require the Legislature to change the manner in which money is collected and distributed. Legislators have tried to amend the constitution to allow a statewide property tax but have always failed to draw enough support.

"This deadline is a real hard, firm deadline," said state Rep. Dan Branch. "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 Legislature has been unable to agree on a new school finance package during the last two regular sessions and three 30-day special sessions.

Gov. Rick Perry praised the ruling and said he plans to call lawmakers back to Austin to take up the issue. For the Legislature to act before summer, Perry, a Republican, must call lawmakers back into another 30-day special session.

After the Legislature failed to reach a solution over the summer, Perry named a commission to recommend ways to restructure school finances. It met for the first time Monday.