School Districts Seek "Backdoor" Property Tax Hike

Date: June 08, 2017

In 1994, Michigan voters approved “Proposal A,” amending the Michigan Constitution to reduce school property taxes and limit the taxing authority of local school districts. Proposal A was also supported by NFIB.

Since then, numerous attempts have been made to erode what Proposal A accomplished when it came to reining in property taxes. One of those tactics involves various legislative attempts to expand the use of school “sinking funds” beyond their original intent of being solely for real property improvements. By allowing sinking fund bond issues to be used for everyday operating expenses, school districts could open a whole new 5-mill property tax opportunity.

Senate Bill 384, introduced on by Republican Senator Dale Zorn, is an example of this type of tactic and would allow bonding under school sinking funds to be used for the purchase of school buses. The bill is nothing more than a creative solution to push more school operating expenses onto local taxpayers, exactly the problem Proposal A was meant to fix. NFIB is working with other business groups to oppose this bill, see the memo text below:

MEMORANDUM

To:     Members of the Senate Finance Committee

From: Alicia Urbain – Michigan Association of Public School Academies

          Beth DeShone – Great Lakes Education Project

          Brad Ward – Michigan REALTORS®

          Charlie Owens – National Federation of Independent Business

          Dan Papineau – Michigan Chamber of Commerce

          Jared Burkhart – Michigan Council of Charter School Authorizers               

Date:                    May 31, 2017

Subject:               Please Oppose SB 384

We write to you today to inform you of our opposition to SB 384, a bill that represents an unprecedented expansion of what school district sinking fund millages can be used for.

On March 15, 1994, Michigan voters approved “Proposal A,” amending the Michigan Constitution to reduce school property taxes and limit the taxing authority of local school districts.  In addition to reducing the overall reliance on property taxes, Proposal A intended to close the spending gap between school districts across the state.  It was not long after Proposal A passed that attempts were made to erode what Proposal A accomplished when it came to reigning in property taxes. Governor John Engler rebutted these attempts, referring to Proposal A in a veto message saying, “we cannot stand by and let that historic step forward be reversed piecemeal by those that preferred the old school finance system–a system that was unfair to students and taxpayers alike.”

Unprecedented Expansion

SB 384 is a significant expansion of local school district taxing authority. Expanding the use of school sinking funds beyond their original intent of being solely for real property improvements, to being used for the purchase of school buses, is nothing more than a creative solution to push more school operating expenses onto local taxpayers, exactly the problem Proposal A was meant to fix.

Proliferates School Funding Inequities

Beyond being a startling expansion of what sinking fund revenue can be used for, there are also serious concerns regarding school funding inequities with SB 384. Funding for all public schools is based on students, and valuing them equitably, no matter where they live or what public school they attend.  Sinking Fund tax revenue only creates additional disparities among all our schools.

The more uses for sinking funds, the more likely districts will impose sinking fund millages on taxpayers. And, if enacted, these millages would further disadvantage charter public schools and many traditional public school districts who can’t pass these taxes, creating a greater “privilege” gap between public school students.

Charter public schools are not allowed to levy millages or sell public bonds or even share in regional enhancement millages. By law, per pupil funding for charters is at or below the per pupil amount of the geographic host district, never above.  The current funding gap is about $1,600 for charter public schools compared to the per pupil funding of the traditional district. Yet, charter public schools build buildings, pay for capital expenses, pay competitive salaries and benefits and, in too many cases, are denied access to, or pay additionally for, existing public school buildings.

Diminishes Privatization

Lastly, allowing districts to push the cost of school buses onto local taxpayers diminishes the likelihood that schools will explore privatization of this function. Privatization is a very practical and viable option for a district’s transportation needs and is a cost-effective alternative to running a fleet of vehicles on their own.

It is for these reasons we ask that you oppose SB 384 and stop efforts to erode Proposal A and the taxpayer protections it provides. 

 

 

Related Content: Small Business News | Michigan | Taxes

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