Perry will sign school finance bill

AUSTIN (AP) With two weeks left to avoid the threat of schools closing, Gov. Rick Perry says he'll sign a landmark tax overhaul that lawmakers hope will prevent a freeze on state money to schools.

Attorneys say that Perry's signature on the proposed tax swap will get the state out of legal trouble - for now.

"With several strokes of my pen, we're going to reward teachers and reform our schools and provide a record property tax cut that will make home ownership more affordable," Perry said. His spokeswoman said the governor believes the package of bills meets the court mandate.

The court's order stems from a lawsuit brought by hundreds of school districts that argued the state does not provide enough money to public schools. The Texas Supreme Court agreed with part of the districts' arguments and gave the state until June 1 to resolve the unconstitutional system or risk a freeze on money to schools.

"Undoubtedly schools will open ... state money will continue to flow," said former state district Judge Scott McCown, who presided over several landmark school finance cases from 1989 to 2002.

The state's high court said that school districts are being forced to tax property owners at the legal limit just to meet the required standards of an efficient education. Without meaningful discretion to set their own rates, the property tax cap has become a statewide property tax, which is unconstitutional in Texas.

The Legislature answered with a plan to replace a portion of property taxes with other state money - an expanded business tax, a new tobacco tax and some state surplus money.

Generally, courts presume that legislative actions are constitutional, said McCown, now executive director of the progressive Center for Public Policy Priorities. That means it would take a complaint from plaintiffs to call into question whether the court's order has been satisfied.

Most of the school funding changes will take effect in the next few months. But attorneys for the suing school districts say it'll take at least a year to determine if the new system passes constitutional muster.

"It'd be a heavy burden to show in the abstract that the plan wouldn't work," McCown said. "It may be easy to show a year from now that the plan hasn't worked."

Attorney David Thompson expects to meet later this week with his clients to discuss the impact of the legislation and future plans.

"There's a lot that's positive, but it would be premature to

conclude that they've met the court order," said Thompson, who represents 58 of the suing school districts, or about a quarter of Texas' 4.3 million public school children.

While the school finance proposal calls for property tax rates to be reduced from the cap of $1.50 to about $1 over the next two years, school boards can vote to raise their tax rates by an additional four cents this year. That falls short of the 10 cents that most experts say constitutes the meaningful discretion for districts to determine their own rates and be legal. That's one area of concern about the plan, Thompson said.

The state attorney general, who's office defended the state in the lawsuit, would not comment on the Legislature's proposal.

Attorneys for other groups of plaintiff districts said they were still studying the legislation and hadn't yet decided how they would proceed.

"We won't really be able to know for sure until after the school year starts and everybody sets their tax rates," said longtime Austin attorney Buck Wood, who represents about 270 school districts in the case. He predicted it would be about a year before the state sees more legal action in the case.

"I don't know of anybody clamoring to go back to court right this minute," Wood said.