Michigan Voters To Consider Vexing Sales-Tax Issue

By Tom Mirga — June 21, 1989 5 min read

After two years of fruitless debate over school-finance reform, Michigan lawmakers last week agreed to let voters decide whether to raise the state sales tax and, if so, by how much.

A measure approved by the legislature June 14 will place two competing constitutional amendments on the Nov. 7 ballot.

The first proposal, a slightly modified version of a plan rejected earlier this year, would raise the sales tax from 4 cents to 6 cents, with 1 cents earmarked for local property-tax relief and the remainder for state aid to schools. In addition, the measure would create a statewide property tax, revenues from which would be taken by the state and redistributed in order to narrow the spending gap between school districts.

The second proposal, an earlier version of which was also rejected by lawmakers, would raise the sales tax by only half a cent, with all revenues earmarked for schools.

The new tax would take effect only if the legislature approved a package of education “quality” bills that would set statewide curriculum standards, create incentives for site-based school management, establish a statewide “outcome-based” accreditation system, and require districts to issue annual school report cards.

The sales-tax increases proposed under both plans would raise state aid to schools by $400 million. The first proposal’s call for local property-tax cuts and a new state property tax, however, could increase that figure by an as-yet-undetermined amount. Legislative staff members had not prepared fiscal-impact statements for the two proposals as of late last week.

If both plans are approved by voters, the one that received the most votes will be the one implemented.

The approval of the competing proposals brought to an end, at least temporarily, one of the most contentious legislative debates in recent state history.

For more than two years, Gov. James J. Blanchard, Democratic and Republican lawmakers, and the state’s education and business communities have tried without success to craft a finance-reform plan that could win the support of a majority of the participants in the debate.

“It definitely was not on our agenda to put two plans on the ballot and let the people make a choice,” said Allan Short, director of government affairs for the Michigan Education Association. “But this week we came to the conclusion that we could not get an agreement on one issue and that we couldn’t hold together a coalition of education, business, and agriculture.”

Mr. Short said the state education community was in a difficult position because it had backed both of the proposal at various times during the debate.

“There’s some real mixed feelings today” among education groups, he said. “We’re going to have to do some polling and see what can pass.”

Other participants in the debate, however, have already started to stake out their positions.

According to Mr. Short, the Michigan Chamber of Commerce has announced that it will oppose both plans. But the Michigan Manufacturers Association--which includes the Big Three automakers and other major businesses in the state--has said it will support the half-cent sales-tax increase.

The half-cent proposal is also supported by Governor Blanchard, a Democrat.

“I support the half-cent plan because it focuses on quality improvement ... and not just more money for the status quo,” he said.

Mr. Blanchard, however, applauded the legislature “for giving the voters a chance to decide rather than keeping this issue locked up in the Capitol.”

In a related development, the state’s largest newspaper last week released the findings of a study it commissioned that concludes that students’ scores on Michigan’s competency tests are more closely correlated with such factors as family educational background and household income than with the amount that their school districts spend per pupil.

In addition, The Detroit News reported in a series of articles, spending disparities between Michigan’s 524 districts are much smaller than those cited by advocates of school-finance reform.

Similar research in other states and districts on the relationship between student achievement and such factors as per-pupil spending, class size, and socioeconomic status has reached widely varying conclusions. A correlation between spending and achievement has yet to be definitively proven or disproven, many researchers say.

The Michigan study was based on a computer analysis of statewide data prepared by James Rudolph, a former researcher for the state education department who now heads a private consulting firm.

Roger Martin, the newspaper’s Lansing bureau chief, noted that much of the debate over the school-finance reform plans had centered on charges that spending per pupil in the state ranges from $2,000 to $7,000.

“We wanted to see if that gap was real, and exactly what kind of impact money has on the quality of education,” Mr. Martin said.

There is little relationship between spending for instruction and students’ scores on the Michigan Educational Assessment Program, which is designed to measure basic skills in reading, mathematics, and science.

The study found that the state’s five richest districts ranked 235th, 6th, 82nd, 5th, and 494th respectively when compared on the basis of their students’ composite scores on the meap. On the other hand, the state’s five poorest districts ranked 201st, 496th, 11th, 147th, and 367th respectively in terms of their students’ scores.

Districts with above-average test scores tend to have relative high median family incomes and high percentages of adults with college degrees. Districts with below-average scores have low family incomes and higher proportions of adults who had dropped out of school.

There is little relationship between student performance on the meap and teacher salaries and class sizes.

Nearly 95 percent of the state’sdistricts spend between $1,000 and $2,000 per pupil for “basic instruction.”

Basic instruction, as defined by the newspaper, includes teachers’ salaries, textbooks, classroom supplies, and operating costs for classroom computers. It does not include costs for transportation, building maintenance, employee benefits, and special and vocational education.

Also last week, the state education department reported that 73 percent of the local school-tax issues that appeared on the June 13 ballot were approved.

Some state and local officials had feared that the series of News articles would prompt voters in some districts to reject their school-tax levies.

A version of this article appeared in the June 21, 1989 edition of Education Week as Michigan Voters To Consider Vexing Sales-Tax Issue