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Gov. Perry Praises School Finance Reform Victory

Location: Austin, TX

Gov. Perry Praises School Finance Reform Victory

Plan Provides for Educational Excellence, Record Property Tax Relief, Historic Tax Reform

Gov. Rick Perry today was joined by Lt. Gov. David Dewhurst, Speaker Tom Craddick, lawmakers and members of the Texas Tax Reform Commission to praise the historic school finance reform plan passed this week by the Texas legislature. The plan reduces property taxes by an historic $15.7 billion and the net tax burden by $6.9 billion over the next three years, raises salaries for all teachers while creating the largest performance pay program in the nation to reward teaching excellence, and gives Texas a broader, fairer business tax that reflects our diverse economy and is assessed at a low rate.

"I will be proud to sign this plan that will reward teachers and reform our schools, provide a record property tax cut that will make homeownership more affordable, reduce the net tax burden on Texans by nearly $7 billion, and improve our tax system so it is fairer because it is broader," Perry said. "Because of this plan, our schools will improve, our economy will grow and our state will prosper."

Taken as a package, House Bills 1,2,3,4 and 5 will reduce property taxes by $15.7 billion over the next three years. The property tax bill on an average-priced home in Texas will drop by nearly $2,000 over the next three years. The net tax burden will decrease by $6.9 billion over the same period, resulting in greater economic growth and job creation as estimated by economists Ray Perryman, David Hartman and Reagan advisor Art Laffer.

The plan uses less than half of the surplus of this biennium, and draws on natural revenue growth in the next biennium. It also achieves landmark reform in education, including:

* A $2,000 Pay Raise for Teachers: Legislators passed a $2,000 across-the-board pay raise for teachers, restoring the full amount of the teacher health stipend and building on the positive trend in teacher compensation that has seen salaries increase by $11,700 for teachers in the classroom since 1999.
* Performance Pay for Excellent Teachers: With the stroke of a pen, Governor Perry will create the largest performance pay plan in the nation to reward classroom excellence. With $260 million for bonuses of up to $10,000 per teacher for locally-designed incentive programs, and another $100 million for the Governor's Educator Excellence Awards Program, Texas will take the national lead in rewarding educational excellence and attracting top-performing teachers to struggling campuses.
* Improving High Schools: HB 1 provides more than $1 billion over three years to reform Texas high schools and further the goals of the governor's high school initiative, which are to reduce the dropout rate, replicate successful school models and prepare more students for college.
* Raising the Bar: Legislators strengthened the curriculum by requiring four years of math and science to better prepare students for the high-tech economy.
* Greater Financial Accountability: Taxpayers will now be able to get more detailed information on school expenditures because of new financial accountability reforms.
* Robin Hood Relief: By 2008, close to $1 billion in local property tax revenues will remain in local districts to be spent on local students instead of being exported to other areas of the state.
* Greater Funding Equity: The state will make a historic commitment to funding fairness, achieving up to 94 percent funding equity on enrichment dollars.
* Teacher Mentoring: Millions of dollars will be dedicated to teacher mentoring programs to keep young educators in the classroom.
* More Money for Schools: With $1.8 billion to fund teacher pay increases and classroom excellence initiatives, as well as funding provided last session, legislators have increased school funding by $3.4 billion in the current fiscal biennium.
* State Share Increases Dramatically: By next year the state share of education funding will increase to 50 percent, reversing a trend scheduled to take us to 34 percent in FY2007 if nothing had been done.

Perry also praised the taxpayer protections contained in the tax cut package, saying "new taxpayer protections that dedicate revenue increases to sustained property tax relief, and that require a vote of the people for local school leaders to raise taxes more than four cents, ensure that this tax cut is an investment in Texas' future."

Voters will have to approve local school tax hikes above four cents for every $100 of assessed value. Unlike today's law, which allows local school boards to raise taxes up to six cents every year without a rollback election, the new law allows them only four cents above the new rate one time without an election.

Perry thanked former Comptroller John Sharp and members of the bipartisan tax reform commission for creating "the plan no one thought possible: a tax reform bill that is fair, equitable and good for the economy." Perry also praised Lieutenant Governor Dewhurst, Speaker Craddick and members of the legislature for their leadership in passing the historic reforms.

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