School finance will keep all three branches of state government busy next week. Think of this: The Texas House plans to return from the Independence Day break next week to vote on a tax bill it can send to the Senate. Negotiators from the two chambers will get started on talks to reconcile differences on the education half of the school finance fix. And the Texas Supreme Court will, on Wednesday morning, hear arguments on the constitutionality of the current system. If you're a wonk, or bored, or if you're paid to know this stuff, you can bone up on the case or refresh your memory. For the briefs filed by lawyers on their way to the Supremes, you can get everything at the court's own site. For a copy of the lower court ruling that's being appealed, look at these, from the Files section of our website: ? State District Judge John Dietz's initial ruling ? His final judgment ? And his findings of fact  

You might see that headline a lot over the next few months. She's running for governor, and so is he. In this installment, Gov. Rick Perry offered his own school finance plan, a scaled-down version of what didn't pass the Legislature during the regular session. It took a little from each side, and even some from the Democrats, and Perry has been all over the state promoting it. He's also running ads and trying to enlist Republican financiers to pressure lawmakers to do something with school finance during the special session. Comptroller Carole Keeton Strayhorn, asked by Rep. Jim Keffer, R-Eastland, to run the numbers on Perry's plan, said it doesn't balance. And she said it not with flowers but with invective: "The Governor needs to go back to the drawing board and give Texans a plan that works. Calling the Legislature abruptly back into session without a plan, without a direction and without a clue is no way to govern this state." She said Perry's remedy would come in $200 million short in the first two-year budget and would leave the next Legislature with a choice between cutting back the plan or finding $2.6 billion in new money to keep it going after that. Perry didn't shoot back directly, but dispatched an aide to say the comptroller wasn't including all of the money that's available, that his plan does balance, and to say Strayhorn put her "political agenda" ahead of a straight analysis. In a separate blast of camaraderie, Perry's campaign dinged her after an aide told The Dallas Morning News that she would probably accept a pay raise the Legislature included in the budget for her and for other statewide elected officials. The governor was initially included, but got his raise excised before the budget was complete. "Strayhorn Clearly Opposes Performance Pay, Intends to Accept $33,000 Pay Raise Despite Her Record" was the headline on their press release. Attorney General Greg Abbott and Land Commissioner Jerry Patterson told the paper they also intend to take the raise offered by the Lege.  

A handy July 4 tip: You shouldn't leave chocolate cream pies or potato salad or tax bills sitting out. They have notoriously short shelf lives and what tastes good at first can sour quickly in open air. The House started the newest tax bill down the Yellow Brick Road with a party-line vote in support of a bill that, with a few modifications, is essentially the plan offered by Gov. Rick Perry at the beginning of the special session. They approved it on a Wednesday afternoon, apparently hoping that it won't get nibbled to death over the July 4 holidays while it sits waiting for a vote from the full House a week later. What's up? Take your pick: a) The management in the House and elsewhere thinks the bill will survive the wait. b) The bill is dead, but it's not only a decoy. House leaders will produce the real thing on the morning of the debate. That's worked before, when the Legislature was raising taxes during the 1980s. c) The bill is dead, and it'll be up to the governor and others to lead a revival when it gets to the floor of the House. d) The leadership wants to float this trial balloon to see whether anything will survive. Better to die over the weekend before anyone's neck is on the block than to prove unpopular after the House has already voted. e) The state's leadership is not as organized as you think. Some details of the version that's on its way to the full House: • It would buy down local school property tax rates (now capped at $1.50) to $1.23 the first year, and to $1.12 the second year. School districts would be able to add back up to 15 cents in local enrichment money (with voter approval) bring those totals to $1.38 and $1.27, respectively. It would pay for that with an array of higher state taxes. • It would add a penny to the state sales tax, bringing that to 7.25 percent; local add-ons would raise that to 9.25 percent, giving Texas the highest rates in the U.S. According to a survey done by the Tax Foundation at the end of 2004, several states had 7 percent sales tax rates, but none exceeded that. The current Texas rate is 6.25. The rate would be raised even more for motor vehicle and boat sales, to 7.35 percent from 6.25 percent -- you read it right, 1.1 cents -- again to the highest in the nation. • Sales taxes would be expanded to include bottled water, certain kinds of computer programming and repairs of motor vehicles. • The $1 increase in the cigarette tax that's been talked about for two years is included. • Choice is out. During the regular session, the House wanted to give businesses a choice between the current franchise tax and a payroll-based tax. That was included in a plan forwarded by Democrats on the committee, but it wasn't in Perry's plan and it's not in the plan put forward by the committee. They would try to close the two largest loopholes included in the law by earlier lawmakers (called "Geoffrey's" and "the Delaware sub" to save the tax accountants from trying to explain their tricks) but wouldn't expand the base of the tax to businesses that weren't meant to be included originally. • The attorney general would be allowed to bring in outside collectors -- paying up to 30 percent of the amount collected -- to bring in uncollectible debts. That wouldn't extend to taxes the comptroller is trying to collect, but apparently would take in tax collections if the comptroller gives up and turns things over to the state's lawyer. To get the new incarnation of HB 3 on the road, the House Ways & Means panel discarded a plan offered by its four Democrats that would probably have won five votes and spared several of the Republicans on the committee yet another vote in favor of new taxes. The aim of all these things is the same -- to cut local property taxes and to try to get the state out of its losing position (so far) on the constitutionality of the current school finance system. The House comes back on Tuesday, intending to set a rule limiting amendments to the tax bill, and then on Wednesday to try to find a tax bill that can win approval from the full House. They did it during the regular session, but it and its companion education bill died when the House and Senate couldn't agree on the details. 

The Texas Senate spent less than half a day getting the education bill from the House, sending to a committee, passing it there, and sending it back to the full Senate, which also passed it. But it's not what the House liked. It's the bill, with slight modifications, that was approved by the Senate in early May. Let the negotiations begin. To recap: Both chambers have passed legislation that's remarkably similar to the bills that put them in gridlock a month ago. Their disagreement will likely land in front of a conference committee next week, which can try to hammer out a deal. Big sticking points remain: The House's cap on how much locally raised tax money rich school districts have to share with poor districts, and two versions of which teachers should get pay raises and how much they should get. The House also wants to move school board elections to November, when turnout is high, and to move the start date for school out of August to the other side of Labor Day. But does this sound like there's a deal on the way? From a press release issued by Sens. Todd Staples, R-Palestine, and Leticia Van de Putte, D-San Antonio (they chair their respective party caucuses in the Senate) after the Senate substituted its own school reform and finance plan for the one passed earlier in the week by the House: "Today we stand united to support a bi-partisan plan that puts the interests of our students first. We were not willing to consider legislation that provides a temporary fix to school finance at the expense of our school children in May, and we are not willing to do it now... While we appreciate the additional time to discuss the issue of Public School Finance resulting from Governor Perry's decision to call a special session this summer, the Senate as a whole continues to stand behind the plan we offered at the end of the 79th Regular Session." They also said "talking big" about teacher pay raises and then coming up short would break faith with educators, and they genuflected in the direction of Lt. Gov. David Dewhurst and Education Chair Florence Shapiro, R-Plano, for sticking with the original plan. The Senate plan would give teachers $2,000 more than they're making now. Gov. Rick Perry wants teachers to get an average pay hike of $1,500, and the House opted for an incentive pay package that provides more money for teachers who hit performance standards set by the Lege. The House includes an average raise of $1,000 in addition to restoring a $1,000 pass-through benefit taken away two years ago. That's how the education lobby counts this stuff. The various authors say they're offering teachers $3,500 more (the Senate), $2,000 more (the House), and $1,500 more (the Guv). All but Perry are including in that total the $1,000 pass-through. And both the House and Senate include incentive pay in their totals. The House bill almost got bushwhacked on the way to the Senate. House Democrats offered up their version, with its emphasis on increasing homestead exemptions at the expense of cuts in property tax rates, and on giving teachers a full $4,000 pay raise. It was on its way to passage, but on a recount, with House Speaker Tom Craddick casting the deciding vote, it failed. Craddick has been accused by some of his own allies outside of the House of taking too hard a line on school finance. But his majority, on this issue, has been thin. School finance and the tax bill that goes with it got only five vote margins during the regular session. The final version of the education bill had a seven-vote margin after the scare, and the tax bill is pending. Barring some kind of breakthrough, he doesn't appear to have much room to negotiate without risking that majority. The Senate passed its version with a bigger margin, but also got a scare, narrowly killing an amendment that would have "equalized" the local money that districts are allowed to keep for themselves. That's what they call it when they set the formulas to bring poorer districts up to snuff with richer districts. It's expensive, but leaving it out, supporters say, leaves the poor districts in the dust. The version that almost stumped the House failed in the Senate by a two-to-one margin.