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Published in Print: September 18, 1991, as News in Brief

News in Brief

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A state judge in Pennsylvania has given school districts a partial reprieve from new rules requiring them to provide school-tax rebates to local taxpayers.

In granting a temporary injunction this month, Commonwealth Court Judge Madaline Palladino knocked down an Oct. 30 deadline for school districts to make the rebates. She said, however, that districts would still be required to revise their budgets by this week and determine the amount of their rebates.

The judge said a final decision on the new rules would come after a full hearing on the matter later this fall.

State lawmakers required the rebates in an effort to soften the impact of a budget containing the largest tax hike in Pennsylvania's history.

The budget, approved weeks after districts had already set their own spending plans for the year, increased funds for education and directed school districts to funnel any additional, unanticipated dollars to taxpayers. (See Education Week, Sept. 11, 1991.)

But the Pennsylvania School Boards Association, which filed suit against the rebate requirement, contends districts should be able to use the funds for pressing educational needs.

State budgets will face new spending burdens as the result of regulations issued last week by the U.S. Health and Haman Services Department curbing Medicaid reimbursements to states, the National Governors' Association said last week.

The new rules, which H.H.S. said would have saved the federal government about $3 billion last year, will force states "to make severe Medicaid cuts or raise the lost revenue through other program cuts" or higher taxes, Gov. John R. McKernan Jr. of Maine, chairman of the N.G.A.'S human-resources committee, wrote in a letter to the Congress. The nation's governors this summer had urged the Bush Administration to drop the pending regulations. ('See Education Week, Sept. 4, 1991 .)

State officials, who have complained of growing federal Medicaid mandates, said last week's decision only increased their frustration.

"For more than two years, we have asked Congress and the Administration to work with us to address the long-term problems in the Medicaid programs, but the response has been new mandates," Governor McKernan said. "Now the states' ability to finance this ever-growing burden is also being undermined."

Unable to find a legislative resolution to Michigan's long- running property-tax debate, Gov. John Engler has launched a petition drive for a constitutional amendment to cut and cap tax rates.

Mr. Engler last month called for an amendment that would cut local property taxes by 30 percent over five years and to limit future rises in property-tax assessments to 3 percent or the rate of inflation, whichever was less.

The amendment, which could be on the November 1992 ballot if backers can obtain the required number of signatures, would provide that the state reimburse school districts for revenues lost due to the property-tax cut.

The Governor asserts that his proposal would spur economic growth while protecting important services. But Democratic legislators have criticized the plan for favoring businesses over middle-class homeowners and lacking a funding source.

Lower-than-expected income-tax collections may force the state of Montana to borrow as much as $73 million this year to operate its public schools.

The state education department already has been forced to borrow $46.8 million from other state accounts to meet its obligations to local districts through the state foundation formula.

Gregg Groepper, the deputy superintendent of public instruction, said that an additional $26 million will be needed to fund the formula between now and November, when most taxpayers make a payment on their biennial tax obligation.

Vol. 11, Issue 03, Page 1

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