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Mich. Voters To Decide Fate of Finance Amendment

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Gov. John Engler of Michigan last week won legislative backing for a proposal to end the state's nagging school-finance problems, but now faces the potentially more difficult task of getting the state's voters to go along.

The Governor's proposed amendment to the state constitution moved quickly through the legislature last week as various factions in the state's long-running school-finance battle hailed it as a promising compromise.

Within hours after its narrow approval by the House, where it barely gained the two-thirds vote needed, the measure received strong backing from the Senate, which approved it by a vote of 31 to 4.

The constitutional amendment, passed just a week after it was introduced, calls for the state to cut property taxes, increase its sales tax, and reform its school-finance system to more equitably fund schools.

The measure "solves the problem we have been talking about in terms of property taxes and stable funding for schools,'' Sen. Dan L. DeGrow said in an interview last week.

Soon after the House approved the initiative, Governor Engler issued a statement saying he and House leaders had reached a "historic agreement'' that "ends two decades of gridlock on this critical issue.''

The proposed amendment must gain the backing a majority of voters, however, in a special election expected to be held June 2. Even the Governor was conceding last week that getting voters to back the measure will be "a tough sell.''

Funding Floor for Schools

The amendment seeks to gain voter support for a property-tax cut and a sales-tax increase by linking the two together, thereby offering homeowners a tax decrease while seeking to provide adequate state funding for schools.

"In Michigan, our property tax is high, our sales tax is low, and our income tax is just about average,'' Senator DeGrow observed. "If our current plan is adopted, we will be about average on all three taxes.''

The proposed amendment, devised by the Governor and House Republican leaders, would increase the sales tax from 4 cents to 6 cents, with the increase earmarked for school aid.

The amendment also would guarantee each district a minimum of $4,800 per pupil in state aid, and would constitutionally earmark all revenues from the state lottery for the schools.

Property taxes would be cut by an average of 50 percent, to 18 mills, although localities would be allowed to put an additional 9 mills before voters. Current assessment increases would be rolled back, and future assessment increases would be limited to 5 percent or the rate of inflation, whichever was less.

'No Future Kalkaskas'

Superintendent of Public Instruction Robert E. Schiller last week said he and the state board of education are "very supportive'' of the initiative.

"It will insure we will not have future Kalkaskas,'' he said, referring to the district that gained national attention last month by deciding to close its schools early after voters rejected a property-tax increase.

State auditors last week continued to examine the Kalkaska district's finances, and a Senate-passed bill putting the district into receivership was before the House education committee.

Thomas E. White, the director of government relations for the Michigan Association of School Boards, said his organization would back the Governor's proposal, while Richard K. Studley, the vice president for government relations of the Michigan Chamber of Commerce, described himself as "cautiously optimistic'' that the amendment would be supported by his group.

The chamber agreed "to settle for a proposal that is less than perfect,'' Mr. Studley said, viewing it as better than either the existing system or an alternative measure, proposed last month by a bipartisan legislative committee, calling for a local income tax for schools.

The Michigan Education Association, which deployed about 300 members to lobby at the state capital early last week as the initiative was being discussed, backed putting the measure on the ballot after receiving assurances that the state would replace any revenue lost by districts due to property-tax cuts.

The Michigan Federation of Teachers also endorsed a vote on the plan after the House agreed to remove sections the union perceived as giving local districts too much discretion over adult-education funds and too much of the burden for funding teacher-pension increases.

Neither union, however, has formally decided whether to back the initiative when it goes before the voters.

Beverly Wolkow, the executive director of the M.E.A., last week predicted that the amendment would be opposed by some tax-rights groups, as well as by senior citizens and low-income voters more likely to feel the pinch of a higher sales tax.

Voters in the Great Lakes State have turned down several sales-tax increases put before them in recent years. In 1989, a plan similar to the one proposed by Mr. Engler was rejected by a three-to-one margin. (See Education Week, Nov. 15, 1989.)

Backers of the new initiative will have to convince voters "it really is a tax cut,'' observed John T. Truscott, Governor Engler's press secretary.

Mr. White of the M.A.S.B. said Mr. Engler's involvement with the latest proposal should help ease its passage.

"We have a Governor, I think, that everyone recognizes as a fiscal conservative,'' Mr. White said. "He has a lot of credibility on tax issues with the voters of Michigan.''

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