Thursday, the House took up HB 28 by Rep. Dennis Bonnen, a bill that would end a key component of the state funding for Texas public schools. HB 28 eliminates the state franchise tax, a tax on businesses that has been criticized by the business community as unfair, and by the education community as inadequate.

The franchise tax was implemented in the last round of education finance reform as means of making up for the revenue lost when the legislature forced a reduction in local property taxes, but never did fully offset the revenue reduction. But it does bring in significant funding – around $8 billion overall in the current biennium, with about $1.8 billion of that designated for public schools. The fiscal note for HB 28 notes that the bill “will have a direct impact of a revenue loss to the Property Tax Relief Fund and the General Revenue Fund of up to ($3,500,000,000) for the 2020-21 and subsequent biennia. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.”

After many hours of debate, the bill passed on a mostly partisan 98-45 vote and will now be forwarded to the Senate.