Reform plans may be only way out of 1995 tax cut fiasco

THE LEGISLATURE’S 1995 attempt to quell a nascent tax rebellion by replacing some residential school taxes with state funds was far from a perfect fix, largely because the state doesn’t collect school property taxes; counties and schools do. So the Legislature ordered counties and schools to slash tax bills, and sent the counties a check each year to cover their losses.

This would be a complicated mess that leads to dicey public policy questions no matter how you structure it, because more state funding means more state control, and nearly everyone agrees that schools should be controlled locally. If there is a legitimate reason for the state to increase its control over schools, it is to make sure that all children have an equal shot at a good education, regardless of how poor the district they live in.

But when lawmakers passed the 1995 property tax break, they did nothing to provide equity; they simply replaced, on a dollar-for-dollar basis, the money districts were collecting. In some instances, the law indirectly had the opposite effect, because some of the highest and lowest tax rates can be found in some of the poorest counties, as well as some of the wealthiest counties. So while residents in some wealthy counties ended up subsidizing poor districts, residents in some poor counties ended up subsidizing wealthy districts.

Eventually, lawmakers changed the formula so the money is distributed on the basis of population — a more defensible formula, but still one that increases state control without helping give all of our kids an equal shot at a good education. Worse, legislators still required districts to provide the full $100,000 tax break, even though they didn’t provide enough money in some districts, and provided more than needed in others. So taxes had to be raised in some districts, while the state subsidized further tax cuts in other districts.

That is, until money started getting tight. Then the Legislature also capped the total amount of money it sent districts — but continued to demand that they provide the full tax break. So now districts have been forced to raise taxes just to pay for the tax break, which means people whose homes are worth less than $100,000 subsidize tax breaks for those with more expensive homes, and businesses pay more than before.

This tax break never should have passed. It needs to be repealed.

Since the Legislature has made it clear that it’s not going to do that, the only way to solve the problem is to completely revamp our tax system — or at least radically change the school funding system.

Ironically, a proposal to raise the state sales tax and abolish school property taxes could solve this problem. That’s ironic because the major flaw in this plan is deeper than that of the 1995 tax break: It completely eliminates local funding of schools. But it also takes the one step that can possibly justify such a change: It creates a uniform level of funding for each student, and adds a little extra for students who have a harder time learning — thus increasing the chance that all of our children have an equal shot at a good education. Eliminating local funding is still a lot to swallow, but we shouldn’t underestimate the value of reversing this tremendous mistake the Legislature made years ago.