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Mich. Voters Reject Amendment To Retool Tax System

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Michigan voters last week turned back a constitutional amendment aimed at reforming the state's tax system by lowering schools' reliance on local property taxes.

Heavy anti-tax sentiment in Detroit and its suburbs led to the defeat of Proposal A, which won support throughout the rest of the state. Officials said 54 percent of voters rejected the amendment, despite the efforts of a bipartisan coalition that spent heavily on a campaign backing the tax changes.

The plan would have mandated property-tax relief and limited local assessment increases while raising new revenue by increasing the state sales tax from 4 cents to 6 cents. The sales-tax rate is dictated by the state constitution.

Supporters of the proposal were stunned last week by the defeat, as polling had indicated greater support for the measure. The result is widely expected to leave many schools in a financial bind as state funding is not expected to increase and property-tax rates in many areas are at or near their limit.

"Most school districts are prepared to batten down the hatches and significantly cut their budgets,'' said Gerard Keidel, the executive director of the Michigan Association of School Administrators. "This proposal had broad support, and, yet, in the end, it was rejected. It leaves us totally baffled as to how you go about drawing up a proposal that pleases everybody.''

The coalition backing the plan, led by Gov. John Engler, a Republican, included groups ranging from teachers' unions to hospital executives. Although it spent $1.5 million and faced little organized opposition, its leaders had warned that overcoming voter cynicism would be a tough job. (See Education Week, May 26, 1993.)

Results of the June 2 special election showed that resistance in Macomb, Oakland, and Wayne counties--those that include and surround Detroit--doomed the measure, which drew a higher-than-average turnout for a special election, officials said.

Looking for Cues

The proposal's defeat raises a number of concerns among educators across Michigan. They are worried about balancing budgets locally while looking for their next cue from the Governor and legislature about what, if anything, they will do in response to projections that 80 to 100 Michigan districts will be in serious financial trouble by this time next year.

The Governor in the past has backed efforts to cut property taxes without replacing them with state funds. Local officials are also anxious to learn if the legislature will tackle the thorny issues of recapturing local funds from wealthy school districts or raising the state income tax to thwart a potential school-finance crisis.

"People raised the question of trust over the constitutional amendment, but now the situation is being turned over entirely to the ones people don't trust,'' Mr. Keidel said. "The paradox is that if you put the current school-finance system on the ballot, and said we would have some of the highest property taxes in the nation and inequities and limited growth, who would vote for it? But our problem is that nobody will vote to change it.''

Several states have found themselves in similar straits recently.

In November, 57 percent of Illinois voters registered their approval for requiring the state to shoulder a greater share of the state's school budgets, but the constitutional amendment fell short of the 60 percent super-majority required. And in May, Texas voters by nearly a two-to-one margin rejected a plan that would have allowed regional property-tax sharing.

In all three states, observers say, lawmakers came away with the following messages: Voters are not willing to put more money into the public school system, and they do not trust elected officials' remedies for school-finance disparities.

Austerity Ahead

Local officials in Michigan last week were bracing themselves for an austere future that many prayed they could avoid.

In the 5,000-student Holt Public Schools outside Lansing, officials are contemplating a $500,000 budget cut. Over the past year, they have already cut more than $2 million to bring spending down to $28 million, according to Superintendent Mark Maksimowicz.

Budget cuts that had previously targeted new textbook purchases and staff development will now claim jobs and force program cutbacks, the superintendent said. "Depending on what happens down the road, it could worsen,'' he added.

The bleak forecasts for Michigan schools have already come true in Kalkaska, a district that closed in March after it went broke. For some financially troubled districts that do not opt for major program cuts, a similar circumstance could crop up next spring, observers said.

"I can't envision programs across the state going into such a downward spiral, but I'm not sure what the answer is,'' Mr. Maksimowicz said. "Until yesterday, we were optimistic this would pass, but now we're definitely headed into a crisis.''

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