School property tax said unconstitutional

AUSTIN (AP) The Texas Supreme Court ruled Tuesday that local property taxes used to pay for public schools amount to an unconstitutional statewide tax and has given the state until June 1 to fix the system.

Texas' highest civil court agreed 7-1 with one of three arguments brought against the state by hundreds of school districts, but found that overall school funding is adequate and that poor districts have equal access to facilities funding. Justice Scott Brister was the only member of the nine-member court to dissent. Newly sworn in Justice Don Willett did not participate.

The court has been considering the case for months on an appeal from a district court in Austin. Property-rich and poor school districts sued the state, claiming its method of paying for public education was inadequate.

State District Judge John Dietz in September 2004 agreed with the districts and declared the system unconstitutional. He ordered that the problems fixed or the state would have to halt the funding of its schools. Lawyers for the state appealed to the all-Republican Texas Supreme Court.

The state argued that great strides had been made in public education over the past decade and that changes to the funding system should be made by the Legislature, not the courts.

Money for the $30 billion Texas school system comes primarily from property taxes and a loophole-ridden franchise tax.

Dietz ruled the system is unconstitutional because so many school districts in Texas are forced to tax property owners at the maximum limit, which amounts to an illegal statewide property tax.

After the Legislature failed to reach a solution on school finance during its regular session this year, Republican Gov. Rick Perry called lawmakers into two special sessions over the summer. But, again, the legislators couldn't agree on a plan.

Perry office's did not immediately comment on Tuesday's ruling.

In the fall, Perry named 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.

Sharp said has said he wants to reduce property taxes by about 35 percent. He said businesses are willing to pay more toward schools if the tax imposed is a fair one.

He also said a court-ordered deadline to repair the broken system could be the only way to prompt action from bickering lawmakers who might otherwise be blamed by voters for allowing schools to shut down.

His commission met for the first time Monday.