Stealing From Our Schools

Corporate Welfare (5.00 / 1)

I'm glad TPJ did this report.  Now when legislators try to explain why we can't afford to expand CHIP or pay our teachers better, they will have to also explain why it's more important to give $500 million to companies to do what they were probably going to do anyway.  Where else do you build a petrochemical plant except on an ethylene pipeline in East Texas?  Where else do you build a wind farm except on a West Texas butte where the wind blows all the time?  The state (or the school districts) is giving up something for nothing. 

Steve Ogden may be conservative, but he's not stupid.  He knows a dumb idea when he sees one.

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by: david siegel @ Thu Aug 23, 2007 at 15:08:04 PM CDT

One of the Many Downsides (0.00 / 0)

This is why having a every branch controlled by one party is bad.

Some of us are working to change that, but it is clear Texas needs new leadership. This is just gross to see money thrown aside instead of helping our schools.  No wonder we have the largest budget in our states history... we are too busy giving money away to major corporations for campaign favors.

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by: Matt Glazer @ Thu Aug 23, 2007 at 15:17:58 PM CDT

[ Parent ]

Sorry Matt (0.00 / 0)

You can't lay all the blame for this one at the feet of Republicans.  As I recall in 2001, Laney was speaker and no bills could pass without his support and help.  Oh, and in 2001, the House was majority Democrat....

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by: Bob @ Thu Aug 23, 2007 at 18:45:18 PM CDT

A Tale of Two Houses (0.00 / 0)

Didn't Ogden try and ends this bad policy?  I love the argument that because it happened under a Democratic House, nobody is to blame.

No.  The idea was to spur business growth in poor areas by allowing exemptions.  The report says specifically:

HB 1200 allows school districts to offer businesses discounts on their annual property tax bills, with the intention of luring large-scale investment into districts with lackluster property-tax revenues.

That seems great.  Create business. Build infrastructure. It's that whole teach a man to fish idea, and I am a huge fan.

How did it work?

In 2005 and 2006, just six businesses received these tax breaks at a cost of $15 million to the state’s public school finance system. As of May 2007, 50 additional businesses had applications in the pipeline. The state comptroller estimates that in 2008-09, the program will cost the state over $300 million and over $500 million in 2010-11.  Other taxpayers must replace the revenues lost to this little-known program, which is expanding with minimal oversight.

So during the Laney years, no abuse.  In 2005, no abuse.  As of 2007, major abuse.  By 2011, HUGE abuse that is negatively effecting our schools.

Read the full report, it is incredibly interesting.  In the era of pay to play, Republican cronyism, a good idea has been abused.  Color me surprised.

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by: Matt Glazer @ Thu Aug 23, 2007 at 19:53:30 PM CDT

[ Parent ]

what abuse? (0.00 / 0)

school districts and local communities are simly doiing what the law allows.  and despite what this report says, go back and read the law.  it was never bracketed to distrcits with "lackluster property-tax revenues."  it applies statewide, no exceptions.  that's why the fiscal note in 2001 made the cost of this bill to the foundation school program very clear.  in fact, from the fiscal note: "Annual growth in values subject to the property tax reductions and school tax credits provided by the bill would increase state FSP payments by an estimated $504.8 million, less $51.6 million in revenue feedback effects, by fiscal 2011."

in short, the $500 million cost to the state was projected in 2001.  no big surprise.  no breaking news.  no great scandal.  it was the bill the democrat speaker and democrat house passed.  they knew what they were doing.

oh, and by the way, schools aren't "negatively effected" (sic) as the state makes up the difference, hence the fiscal note....

maybe you should do some primary resource research on the issue before popping off, perhaps?

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by: Bob @ Thu Aug 23, 2007 at 22:17:27 PM CDT

[ Parent ]

Research, Intent, and Misused Policy (0.00 / 0)

I am glad you agree we need to take reports from non-partisan groups at face value. Being the partisan hack that I am, I need to do what ever I can to turn neutral studies into pro-Democratic blog posts. 

It was especially easy after reading the old House Journals and talking to people smarter than me that were around in 2001.  The goal of this legislation (legislative intent) was to spur on economic growth in impoverished areas.  That is clear from reading the House Journals and no person I talked to disagrees with that. 

Problem is, some good ideas don't work.  In 2001, the bill was passed.  In 2003, not many problems but not many jobs created.  In 2005, abuse started taking place and rather than creating jobs in the areas that needed it most, the program was abused and the wealthiest school districts (the ones that either spread the wealth to the poorest districts or the ones that need to remain self sustaining) were using this program, not to create jobs or business infrastructure but to give big business huge property tax windfalls.  Maybe not corruption but definitely a problem with our struggling schools.  In the 81st session, Republican Senator Ogden (a point I have stressed three times to show how partisan I am) tried to end the program and close the loophole. 

What did our fearless Republican leadership do?  Left the loopholes wide open for more pillaging. Now, the Republican Comptroller agrees, there is a problem. The linear progression on this is clear.  Policy made.  Policy didn't work, but corporations win (i.e. new margins tax).  Attempt is made by fair minded legislators to end bad policy, but poor and narrow minded leadership refuses.  Bad policy sticks around and now Texas tax papers pay the $800 million tab.

As for schools don't lose out because the state covers the lost $800 million in revenue, that makes little sense to me.  If the state is forced to spend $800 million because of tax refunds to multi-national companies that produce 25 jobs when they originally promise to create 140... then there is $800 million not spent on schools, teachers, CHIP, and on and on and on.

I think we can agree $800 million is no small amount. In fact I think that is more than enough to put every kid cut off CHIP in 2003, back on the program and then throw a $200 million celebration afterwards.

If any of this is wrong, you know factually, then point me and our readers to the links.  I am happy to say I am wrong, but conjecture doesn't show us that.

Thanks for the comments, and I look forward to seeing what your research digs up.

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by: Matt Glazer @ Fri Aug 24, 2007 at 09:25:00 AM CDT

[ Parent ]

Not all Rs are bad; not all Ds are good (3.00 / 1)

I'm not really interested in the partisan aspects of this controversy.  To me the real issue is still corporate welfare, whoever sponsors it.

But let's look at the vote on Ogden's amendment to sunset this giveaway.  He lost 18-11 (Senate Journal, May 23, p. 3388)  Voting with Ogden were Eltife, Fraser, Hegar, Nelson, Nichols, and Seliger - 7 Rs to kill the program.  Also Ellis, Hinojosa, Shapleigh, Whitmire - 4 of the most liberal Ds.

Who supported Brimer? Ds such as Lucio, Uresti, Van de Putte, Watson, West, and Zaffirini, along with 12 Rs.

A lot of good it does us to have these Ds in the Senate if they vote with the big corporations.  Maybe we should start our movement to take back the state in the Democratic primaries. 

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by: david siegel @ Fri Aug 24, 2007 at 10:00:17 AM CDT

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i don't where to start but here goes (0.00 / 0)

1. total bs that the intent of the bill was to spur economic development in impoverish areas.  totally made up spin.  the bill was always intended to be statewide -- hence the fiscal note that matches what the comptroller  is estimating today.  if helping poor areas were the true intent, the bill would have been limited, which it was not. 

2. the cost is to the foundation school program, not general revenue.  that money can only be spent on schools.  it can't be diverted to fund health care, transportation or anything else.  just so you understand, the district agreeing to the abatement is made whole under this program, so the schools do lose out on any revenue.  that is why the bill passed in the first place.  the program orginally existed until the late 90s without the state recognizing the lose to the districts.  now the state does and districts are made whole.

3. if a republican tried to close the loophole and a majority of democrats in the senate voted against him, how is that the fault of "republican leadership?"  i think you'd agree that the governor can sign a law change that doesn't actually pass...  and the speaker can't pass a senate amendment that doesn't pass the senate.... right?  excatly how are perry, dewhurt and craddick to blame?

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by: Bob @ Fri Aug 24, 2007 at 12:33:57 PM CDT

[ Parent ]

Last Response (0.00 / 0)

1) Read the House journals.  Seriously.  On the House floor they said HB 1200 was primarily focused on business growth in impoverished and needy areas. Call it BS, but read the journal before you blindly disagree. Does that mean that it is only for this reason, no.  However the primary reason is for impoverished areas.

2) Good catch on the foundation school program. Too bad we can't use the $800 million on other things. Not going to disagree.  Guess that means that $800 million can't be spent in a better way within the education system.  Guess that means a "fiscal note" no longer equates to a cost to the state.

3) Republican's "lead" the House, Senate, and Executive.  If they can't create a working majority on an issue like Laney, then it is failed leadership.  How many votes do they have in the House and Senate again?  Seems pretty simple.  Republican's have more than enough votes in the House and Senate if Craddick or Dewhurst will lead. They chose not to, and bad public policy survived.  It seems pretty clear to me, but I haven't spent my entire time being negative on the site.

I looked back through all your comments and you have made it a point to insult users and writers on this site and tried very hard to add as little documentation as possible (hence the final response). At first your comments seemed well reasoned, that is why I engaged in your discussion now we are "discussing" with no resolution in site.  Clearly there is a ideological difference between us, and no amount of proof will change that.

Thanks for your comments, but I am going to go back to working on projects that pay my bills.

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by: Matt Glazer @ Fri Aug 24, 2007 at 13:15:24 PM CDT

[ Parent ]

Some background (5.00 / 1)

Here's the intent of HB 1200, from the bill itself (now Tax Code, sec. 313):

§ 313.003. PURPOSES. The purposes of this chapter are to:

(1) encourage large-scale capital investments in this state, especially in school districts that have an ad valorem tax base that is less than the statewide average ad valorem tax base of school districts in this state; ....

 Also:  you are confusing the Foundation School Program, which is funded in each appropriations bill with general revenue, with the Permanent School Fund (the trust fund based on revenue from state land in West Texas) and the Available School Fund (the earnings from the Permanent School Fund), which can be used only to support public education.  If these refineries and wind farms were to pay their full property taxes, like everyone else, that would be $500 million in property tax revenue that could be used to support public education.  Which would mean that $500 million less in GR would have to be spent in state aid through the Foundation School Program.  Which would mean that $500 million more GR would be available for health care, transportation, or anything else.

It costs individual school districts nothing to grant these abatements.  In fact, because of the kickback scheme, they actually make money.  But the state loses, since it has to make up for the lost property tax revenue.  So one entity decides, another entity pays.  No wonder these deals are muliplying.

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by: david siegel @ Fri Aug 24, 2007 at 13:23:34 PM CDT

[ Parent ]

you just made my point (1.00 / 1)

the purpose language is meaninless.  everyone knows that.  but it clearly says the bill is meant to encourage investment in the state.  the "especially" language is there to make people feel better about voting for the bill, an old lege council trick.  that language has not bearing on the actually implementation of the bill.  look at the rule-making, iif you don't believe me.  if you argue otherwise, you're not being honest.  had it just been for districts with an ad valorem taxbase less than the statewide average, then it would have been bracketed to just those districts.  the reason it wasn't bracketed, i suspect, was so that iit could get the votes to pass.

the fact is, this is not a republican scheme to screw the world.  matt still hasn't addressed the previous point that a majority of democrats in the senate voted to keep the program.  their votes would have swung the vote.

face it, this is a program that has bipartisan support as well as bipartisan opposition.  to turn it into anything else is laughable.

and you you're just so put out by having to hear an opinion different from your own, i suggest hyou stop blogging and spend the newly freed up time having conversations with yourself.  people may think you've gone crazy, but hey, you're not going to disagree with yourself!

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by: Bob @ Sat Aug 25, 2007 at 09:57:58 AM CDT

[ Parent ]

Correct (5.00 / 1)

1)  I agree that the language in 313.003 does not, in fact, do anything.  It's just a statement of "purposes," which is pretty unusual in a Texas statute, and isn't binding.  But it does show how the program was sold. 

Brimer pushed this deal for several sessions.  First it was the Boeing Bill, when Boeing was in the market for a new headquarters (they chose Chicago, even though they were leaving Seattle -- where there is no income tax -- and could have chosen Dallas.  I guess a state income tax doesn't really scare off business.  But I digress.)  The next session it was the Intel Bill.  Whatever it took to get it passed.

2)  There are plenty of Rs who hate corporate welfare as a distortion of the free market through which the state picks winners and losers, while there are plenty of Ds who would sell their grandmothers if it brought a few half-decent jobs to their district.  Not everything splits down easily to Rs vs. Ds.  Although personally I think any right-thinking D should see that the return on investment is much better from pre-K than from tax abatements.

3)  I hate that blog comments always turn into name calling.  It must be something about people writing anonymously.

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by: david siegel @ Sat Aug 25, 2007 at 21:59:59 PM CDT

[ Parent ]