The Big Picture about Kids Texas Center for the Judiciary F. Scott McCown, Executive Director Dick Lavine, Senior Fiscal Analyst Eva DeLuna Castro, Senior Budget Analyst

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The Big Pictureabout KidsTexas Center for the
JudiciaryF. Scott McCown, Executive
DirectorDick Lavine, Senior Fiscal AnalystEva
DeLuna Castro, Senior Budget Analyst
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Lots of Kids

• Second largest child population, totaling over
  6.1 million under the age of 18
• Largest growth in child population between
  2000-2003
• 350,000 additional children
• 183,000 more than California
• By 2040, school enrollment projected to double

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Our Changing Demographics
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Great Need for Public Services
Texas US Average Texas rank
of Population under 18, 2002 28.0 25.3 3rd
Child Poverty Rate, 2003 22.8 17.7 8th
Elderly Poverty Rate, 2003 13.0 9.8 7th
of Under-65 Population with No Health Insurance, 2003 26.9 17.6 1st
of Residents Aged 25 or over with at least a High School Diploma, 2003 77.8 83.6 49th
of Residents Aged 25 or over with at least a Bachelors Degree, 2003 24.5 26.5 27th
Source U.S. Bureau of the Census, March CPS and
American Community Survey
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What State Government Pays For
Source U.S. Bureau of the Census, State
Government Finances series. Data for 2002 for
Texas, total expenditures (including trust) of
70.3 billion.
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What Local Government Pays For
Source U.S. Bureau of the Census, Government
Finances series. Data for 2002 for Texas, total
expenditures (including trust) of 77.1 billion.
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Comparing 2004-05 to 2006-07

• Final 2006-07 budget 138 billion in All Funds
• This is 9 more than in 2004-05, less than
  expected growth in population and inflation
• Nationally, state spending per resident has been
  about 50 higher than Texas state spending, and
  this budget will leave Texas near the bottom in
  spending per resident
• As a percentage of the economy, since 1991, state
  spending has been roughly 7, and this budget
  will be about the same

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2006-07 based on SB 1, 2005 Regular Session
(excludes vetoes and subsequent budget actions)
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Public Education Spending

• 2003-04 Texas spent 7,335 per student
• Texas ranked 34th among the states
• Average state spending was 8,208 about 12
  higher than Texas
• Costs of living adjustments are faulty
• Austin 106.1 of U.S. Average
• Dallas 98.5 of U.S. Average
• Houston 96.1 of U.S. Average

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(No Transcript)
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School Funding in Next State Budget
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Price Tags

• Biennial cost of public school enrollment growth
  At least 1.5 billion
• Biennial cost of 3 inflation for public schools
  At least 2.4 billion
• Ending Robin Hood At least 2.3 billion
• Buying down local school property taxes by 10
  cents per 100 taxable value At least 2.2
  billion
• Biennial cost of one candy bar per year per
  child is 4.3 million

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From a Taxpayers Point of View
Source Comptroller of Public Accounts, Annual
Property Tax Report Cash Report.
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From the States Point of View All Revenue
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From the States Point of View Taxes Only
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Our Tax Base is Inadequate
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Indicators of Ability to Pay
Texas US Average Texas rank
Per Capita Personal Income, 2003 29,076 31,459 29th
State and Local Taxes as a Percent of Personal Income, 2002 9.3 10.2 41st
Source CPPP, using data from Bureau of Economic
Analysis and the Census Bureau.
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Households with the Lowest Income Pay the Highest
Percentage in State and Local Taxes
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Not Taxing Where the Money Is
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Revenue Options

• Cigarette tax 1/pack increase raises 1.7
  billion biennially
• Video Lottery Terminals 1.1 billion biennially.
  Crack cocaine of gambling
• Revised Franchise Tax (Business Activity Tax)
  Pre-tax net income, add back compensation minus
  first 30,000 per job times 1.95
• Sales tax rate increase but this is extremely
  regressive, and TX already has one of the highest
  rates
• Sales tax base expansion (to services not covered
  now)

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If We Replaced Current School Property Taxes with
Sales Taxes
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House Proposed Tax Change(H.B. 3)
Source CPPP Policy Page 232, Tax Equity Note
Confirms that Most Texas Families Would Pay More
Under HB 3, the Tax Relief Bill, March 2005.
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The Texas Constitution Article 8 - TAXATION AND
REVENUE Section 24 - PERSONAL INCOME TAX
DEDICATION OF PROCEEDS (a) A general law enacted
by the legislature that imposes a tax on the net
incomes of natural persons . . . must provide
that the portion of the law imposing the tax not
take effect until approved by a majority of the
registered voters voting in a statewide
referendum held on the question of imposing the
tax. (b) A general law enacted by the
legislature that increases the rate of the tax,
or changes the tax, in a manner that results in
an increase in the combined income tax liability
of all persons subject to the tax may not take
effect until approved by a majority of the
registered voters voting in a statewide
referendum held on the question of increasing the
income tax. (f) In the first year in which a tax
described by Subsection (a) is imposed and during
the first year of any increase in the tax that is
subject to Subsection (b) of this section, not
less than two-thirds of all net revenues
remaining after payment of all refunds allowed by
law and expenses of collection from the tax shall
be used to reduce the rate of ad valorem
maintenance and operation taxes levied for the
support of primary and secondary public
education. In subsequent years, not less than
two-thirds of all net revenues from the tax shall
be used to continue such ad valorem tax relief.
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TEXAS CONSTITUTION (Contd.)
(g) The net revenues remaining after the
dedication of money from the tax under Subsection
(f) of this section shall be used for support of
education, subject to legislative appropriation,
allocation, and direction. (h) The maximum rate
at which a school district may impose ad valorem
maintenance and operation taxes is reduced by an
amount equal to one cent per 100 valuation for
each one cent per 100 valuation that the school
district's ad valorem maintenance and operation
tax is reduced by the minimum amount of money
dedicated under Subsection (f) of this section,
provided that a school district may subsequently
increase the maximum ad valorem maintenance and
operation tax rate if the increased maximum rate
is approved by a majority of the voters of the
school district voting at an election called and
held for that purpose. The legislature by general
law shall provide for the tax relief that is
required by Subsection (f) and this subsection.
(Added Nov. 2, 1993.)
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How Would An Income Tax Work?
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A State Income Tax, With Property Tax Reductions,
Would Benefit Most Texans
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• One and Indivisible