Education and fiscal policy had been contentious issues since the end of the Civil War in 1865. The tradition of including public education in the state Constitution was established in 1827, when Texas was part of the Mexican state of Coahuila y Tejas. The mandate to create a state system of public education under that first constitution was never fulfilled, and was eventually removed.
Later Texas constitutions reintroduced the mandate. Statewide public education received extra attention in the Constitution of 1866, immediately following the Civil War. This Constitution outlined new initiatives for public schools, including the creation of the office of the state superintendent for public instruction, an office that was maintained in the Constitution of 1869.
The Constitution of 1876 reaffirmed some of the education funding provisions inherited from previous constitutions. Article VII, for example, specified that all lands and the proceeds from those lands that had been previously reserved for the state system of public education would be reserved under the new Constitution. This occurred despite conflict in the decade before the 1875 Convention over spending on public schools - conflict that was shot through with concerns about taxation and the accumulating state public debt.
Some important changes weakened statewide public education. The single office of the state superintendent for public instruction was replaced in the Constitution of 1876 by a State Board of Education composed of the Governor, Comptroller and Secretary of State charged with managing public funds and overseeing state schools (Section 8). The conventioneers also abolished compulsory school attendance and sought to limit spending on public education.
The main innovation in Article VII was the restriction that no more than one-fourth of the state's general revenue could be spent on public schools. The framers also were careful to protect existing funding sources for public education by prohibiting their use for any purpose other than education. This practice of dedicating funds - whether for schools, roads, or other purposes - is a prominent feature of Texas governance today.
The Constitution also formally established the University of Texas (although its location was left to the Legislature), and it created "permanent" funds for both this new university and for previously established asylums for "the lunatic, blind, deaf and dumb, and orphaned." Like the two preceding constitutions, it provided for separate schools for African Americans.
In its provisions for fiscal authority generally, the Constitution sets limits on taxation and spending like those imposed on the state's public schools. On the one hand, Article VIII (Taxation and Revenue) begins by providing broad grants of authority to the Legislature to impose taxes on property and incomes, as well as on voting (established in previous constitutions to support schools). The main general restriction which is provided in the article's short first sentence apparently limits the Legislature's ability to classify objects for purposes of taxation: "Taxation shall be equal and uniform."
Altogether, the numerous sections of Article VIII constitute a list of specifications that resemble a detailed and restrictive tax code that reaches down to the county and municipal levels. Other important restrictions on fiscal authority appear elsewhere in the Constitution, notably the prohibition in Article III, section 49 of debt financing of state government. This list in Article VIII includes:
- tax rates
- restrictions on appropriation of funds
- procedural requirements
Section 1, for example, provides the following constitutional exemptions:
- "persons engaged in mechanical or agricultural pursuits shall never be required to pay an occupation tax"
- "two hundred and fifty dollars worth of household and kitchen furniture, belonging to each family in this State, shall be exempt from taxation"
Section 2 prohibits taxation of public property used for public purposes, as well as religious places of worship, non-profit burial places, schools, and institutions of public charity.
Finally, Article VIII specifies procedural and institutional requirements related to property assessment and tax collection. Property is assessed and taxes collected in each county where the property is located or, in the case of "unorganized" counties, in the county to which that county is attached for judicial purposes.