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McWherter Drops Income Taxes To Save School Reforms

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Gov. Ned McWherter of Tennessee has agreed with lawmakers to postpone consideration of his proposed state income tax in hopes of clearing a massive education-reform bill in this year's legislative session.

The result, observers say, may be that the state will end up with a comprehensive school-improvement program--including finance reforms, mandatory kindergarten, reduced class sizes, and changes in the high-school curriculum--without the money to pay for it.

Lawmakers have spent three months examining the Governor's school-reform bill, which remains in committee in both the House and Senate. Legislative leaders recently warned, however, that the chances for even that measure passing could be severely hampered if lawmakers were also forced to consider over4hauling the tax system at the same time.

Officials in the Governor's office acknowledged that their proposal may have overreached by challenging two longstanding political traditions at the same time. Not only did it call for creating the state's first income tax, in the midst of a worsening economic recession, but it also sought to abolish the widespread practice of electing local school superintendents. (See Education Week, Feb. 20, 1991.)

A spokesman for the Governor said that lawmakers and Mr. McWherter plan to revisit the tax reforms, which also call for reducing reliance on sales taxes, possibly in a special session later this year.

'Meaningless' Without Money

Nelson Andrews, chairman of the state board of education, said last week that the comprehensive educa8tion and tax changes may have overwhelmed many legislators.

Mr. Andrews said that the education plan suffered at first because of uncertainty over how it would be funded, and then was overshadowed by the tax-reform debate.

While praising the legislature's deliberate consideration of the education package, Mr. Andrews expressed concern that the bill may become law without being funded.

"I think it's a good chance that the education package will pass," he said, "but it's meaningless without the funding."

Ken Renner, the Governor's press secretary, said that delaying the tax revisions appeared to be the best strategy for advancing the education reforms in an unpredictable year.

"Everything is very unsettled right now," he said.

Lawmakers continue to wrestle with the bill's mandate that superel10lintendents be appointed by school boards. State business leaders have said the provision is critical to winning their support for tax reforms.

Seventy-nine of Tennessee's 95 county school superintendents are elected, and resistance to doing away with the practice has become the biggest hurdle facing the bill, particularly in the House.

Even as legislators debated the school plan, officials in the Governor's office last week were considering $121 million in cutbacks in state spending forced by revenue shortfalls. Mr. Renner said the cuts, which follow $255 million in already-recommended reductions, could trim state school aid next fiscal year.

Parking the Buses

Tennessee schools are already struggling to cope with those cuts and other fiscal problems. In Sequatchie County near Chattanooga, for example, dwindling sales-tax revenues, local resistance to property-tax increases, and state-aid cutbacks recently led the school board to park the district's 21 school buses for the rest of the year. Without such action, officials estimate, the district would have finished the school year with a $55,000 deficit.

Superintendent Winston D. Pickett said next year does not look much better, as state cuts would force the district to raise its property-tax rate by $0.67 per $100 of assessed value to maintain current programs.

Mr. Pickett, who was elected to his post, said he is disappointed that the education debate is taking so long and that tax reform has been delayed.

"We're saying we've got to have reform, and it's apparent to us that an income tax is the only way to do it," he said. "The legislature is debating the issue, but what good does it do you to reform if you don't have the money to put with it?"

In property-poor Sequatchie, the Governor's finance plan would reduce the local share of school funding from 28 percent to 17 percent. An estimated 68 percent of county residents would pay less in cumulative taxes under the bill.

Despite the financial benefits, however, many local residents continue to question the reform bill because they feel so strongly about keeping their power to elect their school superintendent, according to Mr. Pickett, who favors switching to an appointive system.

"It has caused a great furor because local people say they don't want to lose their right to vote," he said, "even though only about 20 percent of them go to the polls."

Mr. Pickett said he and other educators think the best chance for breaking the tax-reform stalemate may be a court challenge to the state's school-finance system.

A finance-equity lawsuit brought by property-poor districts is currently awaiting a decision by a Nashville judge, Chancellor C. Allen High.

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