CSHJR 1, a Joint Resolution proposing a constitutional 
amendment relating to establishing the Texas Great Classroom Fund 
as a sequestered fund, funded by a Reformed Franchise Tax and a 
portion of the sales tax, a portion of the taxon motor vehicles and 
a portion of the sales tax on cigarettes and dedicated exclusively 
to school finance; prohibiting any other statewide business tax; 
providing for mandatory ad valorem property tax relief, and 
providing that 10% of any locally approved increase in property tax 
after the mandatory property tax relief must be remitted to the 
state for use in teaching and instruction in those school districts 
whose average annual household income falls within the lowest 25% 
of average annual household incomes of school districts within this 
State.
	SECTION 1.  Section 5, Article VII, Texas Constitution, is 
amended to read as follows:
	§ 5. Permanent school fund; available school fund; Texas 
Great Classroom Fund, use of funds; distributions; investments; 
Texas growth fund
	Sec. 5.  (a) The principal of all bonds and other funds, and 
the principal arising from the sale of the lands hereinbefore set 
apart to said school fund, shall be the permanent school fund, and 
all the interest derivable therefrom and the taxes herein 
authorized and levied shall be the available school fund. The 
available school fund shall be applied annually to the support of 
the public free schools. Except as provided by this section, no law 
shall ever be enacted appropriating any part of the permanent or 
available school fund to any other purpose whatever; nor shall the 
same, or any part thereof ever be appropriated to or used for the 
support of any sectarian school[; and the available school fund 
herein provided shall be distributed to the several counties 
according to their scholastic population and applied in such manner 
as may be provided by law].
	(b)  The legislature by law may provide for using the 
permanent school fund and the income from the permanent school fund 
to guarantee bonds issued by school districts or by the state for 
the purpose of making loans to or purchasing the bonds of school 
districts for the purpose of acquisition, construction, or 
improvement of instructional facilities including all furnishings 
thereto. If any payment is required to be made by the permanent 
school fund as a result of its guarantee of bonds issued by the 
state, an amount equal to this payment shall be immediately paid by 
the state from the treasury to the permanent school fund. An amount 
owed by the state to the permanent school fund under this section 
shall be a general obligation of the state until paid. The amount of 
bonds authorized hereunder shall not exceed $750 million or a 
higher amount authorized by a two-thirds record vote of both houses 
of the legislature.  If the proceeds of bonds issued by the state 
are used to provide a loan to a school district and the district 
becomes delinquent on the loan payments, the amount of the 
delinquent payments shall be offset against state aid to which the 
district is otherwise entitled.
	(c)  The legislature may appropriate part of the available 
school fund for administration of the permanent school fund or of a 
bond guarantee program established under this section.
	(d)  Notwithstanding any other provision of this 
constitution, in managing the assets of the permanent school fund, 
the State Board of Education may acquire, exchange, sell, 
supervise, manage, or retain, through procedures and subject to 
restrictions it establishes and in amounts it considers 
appropriate, any kind of investment, including investments in the 
Texas growth fund created by Article XVI, Section 70, of this 
constitution, that persons of ordinary prudence, discretion, and 
intelligence, exercising the judgment and care under the 
circumstances then prevailing, acquire or retain for their own 
account in the management of their affairs, not in regard to 
speculation but in regard to the permanent disposition of their 
funds, considering the probable income as well as the probable 
safety of their capital.
	(e)  A separate fund, to be known as the Texas Great 
Classroom Fund, shall be applied annually for the support of 
teaching, instruction, and the construction or maintenance of 
instructional facilities in the public free schools. No law shall 
ever be enacted appropriating any part of the Texas Great Classroom 
Fund to any other purpose whatever; nor shall the same, or any part 
thereof, ever be appropriated to or used for the support of any 
sectarian school. Any unused portion of such revenue shall be 
applied annually to the support of public free schools, and 
distributed in such manne ras may be provided by law.

	
(f)  The following revenue sources shall be dedicated to the 
Texas Great Classroom Fund:

		
(i) 100 % of the net revenue collected from a Reformed 
Franchise Tax, consisting of a 3.60% tax on employers, 
including municipals, based on compensation paid to 
employees performing services for in this state and a 
tax on the net earnings from self employment on 
partnerships and individuals, other than partners of a 
partnership; 

		
(ii)  100% of gross receipts collected by a tax on 
cigarettes of $83.00 per thousand cigarettes;

		
(iii)  34.62% of gross receipts collected by a sales 
tax of 6.50%, and

		
(iv)  29.03% of total consideration or gross rental 
receipts on a tax on the sale, rental, or use of a motor 
vehicle in this state at a rate of 7.75%.

	
(g)  To the extent that The Texas Great Classroom Fund 
requires additional revenues to fully fund expenditures for 
teaching, instruction, and the construction or maintenance of 
educational facilities, monies from the available school fund and 
the Foundation school fund shall be dedicated to fully funding the 
Texas Great Classroom Fund. If the available school fund receives 
more revenue than is needed to fully fund the Texas Great Classroom 
Fund, the unused portion of that revenue shall be applied annually 
to the support of public free schools, and distributed in such 
manner as may be provided by law.

	
(h)  Subject to ad valorem tax increases for local 
supplementation provided for in § (i), in the first year in which 
the Texas Great Classroom Fund is created, no independent school 
district shall receive more in combined state aid and local ad 
valorem revenue than 100% of such amount received in the prior year. 
Each school district shall reduce its local ad valorem tax 
assessments by whatever amount is necessary to meet the 
requirements of this section. A school district shall be deemed to 
have complied with the requirements of this section if it reduces 
its local ad valorem tax assessments to zero.

	
(i)  After the reduction, if any, in local ad valorem tax 
assessment have been made as provided in § 5(h), a school district 
may subsequently increase the ad valorem maintenance and operation 
tax rate, by an election called and held for that purpose, if 
approved by a majority of those actually voting in the election; 
provided, however, that 10% of any such increase must be remitted 
annually to a state fund as may be provided by law and is thereafter 
used solely for the support of teaching and instruction in the 
public schools within those school districts whose annual average 
household incomes falls within the lowest 25% of the annual average 
household incomes of school districts within this State. A school 
district that qualifies to receive such funds is not required to 
remit such excess to the fund.

	
(j)  No school district shall impose an ad valorem tax at 
arate exceeding $1.25 per $100 of taxable property within the 
district.

	
SECTION 2.  Section 1(c), Article VIII, Texas Constitution, 
is amended to read as follows:
	(c)  The Legislature may provide for the taxation of 
intangible property and may also impose occupation taxes, both upon 
natural persons, partnerships, and upon corporations, other than 
municipal, doing any business in this State. Notwithstanding the 
preceding sentence, no franchise, income, or similar tax shall be 
imposed on the earnings retained, the stock value, or the income 
earned by a corporation, a partnership, a limited liability 
company, unincorporated association, or other business entity 
except for the Reformed Franchise Tax as provided for in section 
5(f)(i), Article VII of this Constitution and there shall be no 
other tax on employers, including municipal, based on compensation 
paid to employees performing services for employers in this state 
or a tax on the net earnings from self employment on partnerships 
and individuals, other than partners of a partnership. Subject to 
the restrictions of Section 24 of this Article, it may also tax 
incomes of both natural persons and corporations other than 
municipal. Increases in the Reformed Franchise Tax must be used to 
fund education. Persons engaged in mechanical and agricultural 
pursuits shall never be required to pay an occupation tax.
	SECTION 3.  Section 1, Article XVII, Texas Constitution, is 
amended to read as follows:
	§ 1. Proposed amendments; submission to voters; adoption                  
	Sec. 1.  (a) The Legislature, at any regular session, or at 
any special session when the matter is included within the purposes 
for which the session is convened, may propose amendments revising 
the Constitution, to be voted upon by the qualified voters for 
statewide offices and propositions, as defined in the Constitution 
and statutes of this State. The date of the elections shall be 
specified by the Legislature. The proposal for submission must be 
approved bya vote of two-thirds of all the members elected to each 
House, entered by yeas and nays on the journals.
	(b)  A brief explanatory statement of the nature of a 
proposed amendment, together with the date of the election and the 
wording of the proposition as it is to appear on the ballot, shall 
be published twice in each newspaper in the State which meets 
requirements set by the Legislature for the publication of official 
notices of officers and departments of the state government. The 
explanatory statement shall be prepared by the Secretary of State 
and shall be approved by the Attorney General. The Secretary of 
State shall send a full and complete copy of the proposed amendment 
or amendments to each county clerk who shall post the same in a 
public place in the courthouse at least 30 days prior to the 
election on said amendment. The first notice shall be published not 
more than 60 days nor less than 50 days before the date of the 
election, and the second notice shall be published on the same day 
in the succeeding week. The Legislature shall fix the standards for 
the rate of charge for the publication, which may not be higher than 
the newspaper's published national rate for advertising per column 
inch. 
	(c)  The election shall be held in accordance with procedures 
prescribed by the Legislature, and the returning officer in each 
county shall make returns to the Secretary of State of the number of 
legal votes cast at the election for and against each amendment. 
Except in the case of a proposed amendment that seeks to alter, 
repeal, or modify any portion of Article XVII, Section 5, 
subsections (e) through (j), or in the case of an amendment that 
seeks to alter the manner in which this constitution may be amended, 
if [If] it appears from the returns that a majority of the votes 
cast have been cast in favor of an amendment, it shall become a part 
of this Constitution, and proclamation thereof shall be made by the 
Governor. In the case of a proposed amendment that seeks to alter, 
repeal, or modify any portion of Article XVII, Section 5, 
subsections (e) through (j), or in the case of an amendment that 
seeks to alter the manner in which this constitution may be amended, 
if 80% of the votes cast have been cast in favor of such an 
amendment, it shall become part of this Constitution, and a 
proclamation thereof shall be made by the Governor.
	SECTION 4.  (a) This proposed constitutional amendment shall 
be submitted to the voters at an election held ______________, 
200__. The ballot shall be printed to permit voting for or against 
the proposition: "The constitutional amendment to establish the 
Texas Great Classroom Fund as a sequestered fund, funded by the 
Reformed Franchise Tax and a portion of the sales tax, a portion of 
the tax on motor vehicles and a portion of the sales tax on 
cigarettes, with net proceeds dedicated exclusively to funding of 
the Texas Great Classroom Fund; to prohibit any other statewide 
business tax; and to provide for mandatory ad valorem property tax 
relief, and providing that 10% of any locally approved increase in 
property tax after the mandatory property tax relief must be 
remitted to the state for use in teaching and instruction in those 
school districts whose average household income falls within the 
lowest 25% of average annual household incomes of school districts 
within this State."