Texas Envy

John and Mary Pappajohn Sculpture Park in Des Moines, IA ID’d by Juan Yanez-Lucero, and by my friend Tim Brown.

It must be hard times in the offices and hallways of the Oklahoma Council of Public Affairs to have their constant rant, that in spite of a decade of revenue reductions plenty of money was still available to fund teacher pay raises, soundly rejected by three-fourths of the Oklahoma legislature and our governor who approved the historic record teacher pay raise and the revenue to pay for it.   So in his April 19 post “School Shutdown Lessons” OCPA President Jonathan Small pivots and spins away from that harsh reality to reflect on the recent teacher walkout in Oklahoma and concludes with this muddle:

Another lesson is that context matters. Stories about Oklahoma losing teachers to Texas are true but omit critical facts. It is silly to argue that Oklahoma should increase our income tax to better compete for teachers with a state that has no income tax. Oklahomans now know that the minimum starting salary for a teacher in Texas is less than in Oklahoma.  How does Texas pay teachers more? It doesn’t. Local school districts do because they have greater access to property taxes – a far more reliable and stable revenue source than income or gross production taxes.  For the sake of the most vulnerable, we must do better.

Small is advocating more reliance on local property taxes, as determined by local school districts, to finance improvements in teacher compensation.  His reasoning, I think, is that property taxes are more reliable and stable than other sources, that local choice/empowerment is a good thing, and this would protect “the most vulnerable”.  Let’s think about each of these.

First, he cites no support for his belief that property taxes are more stable and reliable.  Anecdotally I’m confident we can find many examples of small and large property taxing jurisdictions experiencing the boom/busts of commercial, industrial and utility facility location decisions that belie his assertion.  Also the cyclical and other fluctuations of most broad-based revenue sources, i.e. taxes on property, income, sales, etc., can be mitigated with averaging approaches, think “Rainy Day Fund”, if lawmakers can maintain the discipline.

Second, allowing local taxpayers to decide to use more or less of their property tax capacity to finance teacher compensation, or any other government service, sounds like a nod to democracy and local decision-making, but with respect to school funding it is always a source of huge inequities.  For example, just in Oklahoma County a taxpayer in poor Bethany would have to pay nine dollars for every dollar paid by an Edmond taxpayer to fund the same teacher pay raise.

Yes, Texas relies more on locally generated and approved property taxes to fund its schools which quite likely contributes to having median teacher pay range across the state from just over $41,000 in the Abilene region to well over $55,000 in metropolitan Houston ( Texas Teacher Compensation ).  Sure part of that discrepancy may be due to labor market forces and cost of living differences as well; a real Think, not Stink Tank might try to sort that out before advocating the same for Oklahoma.

It also has resulted in years of protracted litigation (see Cockamamie? You Don’t Know Cockamamie! ) and what appears to this Okie as an enormously complex and likely contentious state school funding formula.  For example, see this from the Texas Education Agency’s website:

Chapter 41 of the Texas Education Code (TEC) makes provisions for certain school districts to share their local tax revenue with other school districts. For the purposes of the school finance system in Texas, districts are designated as either Chapter 41 or Chapter 42 districts. The relative wealth of the school district is measured in terms of the taxable value of property that lies within the school district borders divided by the number of students in weighted average daily attendance (WADA). Chapter 41’s provisions are sometimes referred to as the “share the wealth” or “Robin Hood” plan because districts subject to Chapter 41 of the TEC are required to share their wealth with other school districts. The funds that are distributed by Chapter 41 districts are “recaptured” by the school finance system to assist with the financing of public education for all school districts. 

Let me translate for the Limited Thinkers at the OCPA and anyone else advocating more reliance on local property taxes to fund education in Oklahoma.  Property valuations per student vary wildly among Oklahoma’s school districts.  Any proposal to rely more on property taxes to fund teacher compensation or general operations, if it is to be taken seriously, must address how to maintain reasonably equitable funding among wealthy and poor school districts so that all can provide quality education as promised by our State in these words:

“to provide the best possible educational opportunities for every child in Oklahoma…State support should be extended to all local districts regardless of wealth, for this not only develops a sense of broader responsibility, but also creates flexibility taxwise permitting the exercise of local initiative. State support should, to assure equal educational opportunity, provide for as large a measure of equalization as possible among districts. The taxing power of the state should be utilized to raise the level of educational opportunity in the financially weakest districts of the state.”  Excerpts from Title 70, Section 18-101.

Fortunately, those who drafted Oklahoma’s current system of financing our schools were not as shallow or ill-informed as Small appears to be.  It may well be time to provide more local flexibility to fund our schools, but glib one-liners filled with Texas envy that ignores Texas inequity are not the place to start.

Lastly I’m very curious to know about the “most vulnerable” who will be helped by relying more on local property taxes.  I don’t think they are the same owners of expensive housing that seemed vulnerable to Tom Coburn ( Dr. No’s Holiday (Home)?  ) recently because they would have to pay more.  Small needs to shed his Texas envy long enough to learn some facts and history.  Here are facts about Regional Taxes from the Tulsa County Assessor’s office:

Yes, Texas has no income tax but its property taxes are more than double Oklahoma’s.  The thing about property taxes, unlike income and sales taxes, is that homeowners have to pay them regardless of their ability to pay.  If you earn more and therefore buy more stuff you pay more income and sales taxes; earn less and you pay less.  By contrast your property taxes are not directly related to your yearly economic fortunes.  Which leads us to a history lesson for Small—California’s Proposition 13.

California was experiencing such economic prosperity and growth that housing values escalated rapidly throughout the 1960s and into the 70s.  Many who bought their homes in the 1950s and since retired on fixed incomes found themselves facing property tax bills they could not afford.  That led to the granddaddy of modern anti-tax activism, California’s Proposition 13, which was likely inspiration for the Brown boys I describe in “ Brown Boys Dump Plan B on Oklahoma  ” who led the charge for the supermajority requirement to raise Oklahoma taxes AND the founding of the OCPA.

The legacy of Proposition 13 is more directly felt in Oklahoma with such provisions as the annual cap on assessed valuation increases and the senior freeze for low income Geezers.  Perhaps these protections are effective; perhaps they shift the property tax burden more to working families when they purchase a new home, or to renters whose landlords pass on the increases.  I don’t know, and neither does Mr. Small.  So we both remain clueless about the identity of his “most vulnerable” who will benefit from the higher property taxes he recommends.  Maybe someday he’ll decide to so some real research instead of just making stuff up.

As always lunch is on me for the first to ID the photo location, which isn’t in Texas but looks like it ought to be.