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School Cuts Predicted If S.D. Tax Limit Is Voted

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With the general election coming up, some South Dakota residents are delighted to be one month away from a chance to alleviate a heavy property-tax burden. But from educators' point of view, the state's schools are one month away from potential disaster.

If voters approve a property-tax-limitation initiative included on the November ballot, it could cost schools and local governments up to $350 million a year, opponents of the measure say.

Initiative One would do that by limiting property taxes to 1 percent of a property's assessed value and limiting property-tax increases to 1.25 percent.

In addition, voters may also choose to outlaw the state's video lottery in November, bringing losses to local governments up to $400 million to $500 million.

In Sioux Falls, South Dakota's largest school district with 18,000 students, passage of Initiative One could mean a loss of $44 million a year--almost 45 percent of the district's operating budget.

Superintendent Jack Keegan said the casualties would include five elementary schools; all transportation except for special-education students; elementary school art, music, and physical-education programs; librarians; all extra-curricular activities; and special classes for honors, at-risk, and limited-English-proficient students. Half of the district's staff members would be laid off, and student-teacher ratios, now about 24 to 1, would roughly double, he said.

In the 725-student Parkston school district--which is also large by South Dakota standards--school officials say they might not be able to continue operating their high school if the initiative passes and the legislature does not come up with replacement funds. They anticipate a loss of $1.1 million, approximately one-third of their budget.

High school students would either have to attend a "very slim" program in Parkston, or ride a bus to Mitchell, 22 miles away.

"We see this as a very serious threat," said Donald Quimby, the superintendent of the district.

Calls for Tax Reform

Darlene Halweg, an activist who initiated the measure, said that tax reform is long overdue.

"This is a politician's dream come true," she said. "It's an opportunity to find a solution to a problem that's been brewing for a long time."

Both gubernatorial candidates have made property-tax relief part of their platforms, and most everyone agrees that reform is needed. Local property taxes in South Dakota are high, as there is no state income tax and the state provides less than a third of school funds.

Indeed, proponents argue that the initiative would force the state legislature to find a way to replace the lost funding--and thereby to address the issue of tax equity.

Lola F. Schreiber, the chairman of the Republican-led House education committee, said that lawmakers would probably do that primarily by scaling down state government and encouraging localities to cut back.

Officials in the Northwestern school district have enough confidence in the legislature to go ahead with plans to build a $1.6 million addition to their 317-student K-12 school.

But most school officials have less faith in their representatives.

"If history's any guide," Mr. Quimby of Parkston said, "they won't act."

If that happens, said Diana Larson, the Northwestern district's business manager, the district's budget could be cut by one-quarter, making it difficult to operate the new facility.

South Dakota would "be the armpit of the nation," she said.

A Bitter Debate

"This state is absolutely deaf on an income tax," said Julie Johnson, the treasurer of Taxpayers for Common Sense, an anti-initiative group that includes the state school boards' association, the School Administrators of South Dakota, and the South Dakota Education Association.

Ms. Johnson, who is the president of the Industry and Commerce Association of South Dakota, said sales taxes would have to nearly double to make ends meet.

If the measure passes, it--like the state's school-funding formula--will likely be challenged in court, she and other opponents said.

Opponents liken Initiative One to California's landmark 1978 tax-limitation measure, Proposition 13, which spawned a slew of lawsuits and threw school districts into bankruptcy.

"Darlene Halweg moved here from California two years ago and brought a California solution to South Dakota half baked," Ms. Johnson said.

Ms. Johnson's group has assembled a $74,000 war chest, which they have used to buy television and newspaper advertisements claiming that Initiative One would turn South Dakota upside-down.

The campaign became the focus of a bitter debate last summer, when Initiative One supporters accused them of employing "unethical" tactics.

The Associated School Boards of South Dakota had sent a letter to superintendents and school board members in August, urging them to solicit contributions from vendors of school supplies. (See Education Week, Sept. 14, 1994.)

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