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Gov. Perry Proposes Historic Education Funding, Record Property Tax Relief

Location: Austin, TX

Gov. Perry Proposes Historic Education Funding, Record Property Tax Relief

$7 Billion Property Tax Cut, $5 Billion More for Schools and a Net Tax Cut for Texans

Gov. Rick Perry today unveiled his plan to improve education by increasing school funding while alleviating the tax burden on local property taxpayers.

"My plan offers $7 billion in property tax relief, puts $5 billion in new money into our schools, provides a $1,500 teacher pay raise and includes significant education reforms," Perry said. "My plan is both reasonable and significant and it addresses the issues that this legislature left unfinished."

"The legislature has been working on this issue for over a year. Education reform and school finance has been studied enough and now it is time to act," Perry added. "My plan represents the middle ground between the House and Senate, utilizes good ideas from members of both parties, and most importantly, it sides with property taxpayers, teachers and schoolchildren."

In addition to an average salary increase of $1,500 for teachers, Perry's compromise plan also invests in education technology and textbooks. It provides real education reform, such as strong provisions to shut down chronically failing schools while helping teachers and rewarding schools with large numbers of economically disadvantaged students that succeed. And it provides stronger accountability measures, so more money will go directly to the classroom and more taxpayers will know exactly what gets spent in the classroom. The plan involves the reforms included in the last version of House Bill 2 from the 79th Regular Session, as well as a detailed list of revenue options to offset a property tax cut.

"Rather than allowing textbooks to sit on loading docks, I propose funding those books and shipping them to schools all across Texas in time for the fall," Perry said. "Rather than doing things the same old way, I propose new incentives to reward teaching excellence and reduce administrative costs. And rather than raising taxes, I propose we cut taxes while protecting working families' jobs."

The Perry Plan will result in a net tax cut of $300 million for the people of Texas, a record property tax decrease and a historic funding increase for schools. Perry said his plan is financed in part by savings he made available by vetoing unnecessary expenditures in the regular session, as well as changes to the tax structure. Key aspects include:

* A net tax cut of $300 million for the people of Texas.
* $7 billion in property tax relief - the largest property tax cut in Texas history - with a 20 percent school property tax cut in 2006, and a 23 percent reduction in 2007 that includes an increase in the homestead exemption of $7,500.
* Closure of franchise tax loopholes without a new business tax to ensure businesses pay their fair share.
* Proportion of taxes paid by businesses and consumers remains virtually the same.
* A compromise between previous House and Senate plans that increases the sales tax rate by seven-tenths of a percent; expands the sales tax to include elective cosmetic surgery, car maintenance and repairs, computer repairs and programming.
* A dollar increase in the cigarette tax.
* Measures that will help eliminate fraud in auto sales, that double occupation fees and that repeal the timely filer's discount.
* A cap on local enrichment property tax increases at 2 cents a year, and a total of 12 cents, with voter approval.
* Stronger taxpayer protections that provide a lower threshold for rollback elections and a lower signature requirement.
* Mitigation of Robin Hood by capping recapture at 45 percent of a school district's tax revenues as long as funding is at least 92 percent equitable; current law places no limit on recapture.

"This plan increases the homestead exemption by $7,500, which will help homeowners on the lower end of the economic scale by providing greater relief than they would feel from a straight rate cut," Perry said. "And I firmly believe we must incorporate stronger taxpayer protections. If lawmakers last session thought fewer signatures was good enough for wet-dry elections, then I say it's good enough for Texans trying to stop skyrocketing property tax increases."

Perry said that if legislative leaders have different ideas for education and tax reform, he would welcome other detailed plans.

"But if folks want to just study this issue and kick the tires some more, they can get out of the way while the rest of us act," Perry said. "I haven't the inclination nor the patience to study this issue any longer, and neither do everyday Texans drowning in rising property tax bills."

Perry noted that lawmakers have had three weeks since the end of the regular session to hear the voice of everyday Texans frustrated by failure of education and tax reform.

"I believe now, more than ever, lawmakers are poised to act," Perry said. "They want to resolve this great challenge, and the proposal I offer allows them to do that with historic property tax relief, funded pay raises for teachers, funded reforms in the classroom, and new technology and textbooks."

"Today the clock starts ticking. Teachers are watching carefully, so are taxpayers and parents of schoolchildren," Perry said. "This special session, and the plan I offer today, give lawmakers the opportunity to succeed on behalf of the people of Texas."

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