Tax Referendums In Several States Favor Education

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Voters facing referendums on education-related tax issues in last week's elections generally supported public schools, but often by margins so slim as to "send a message," as one state official said, to those responsible for administering the schools.

See related electionstories on page 4.

In California and Rhode Island, voters approved bond issues to finance school repairs and construction; in Wyoming, they authorized the state to equalize spending among wealthy and poor districts; in Utah, they allowed the state to increase education spending; and in Missouri, they favored an increase in the sales tax that will benefit schools.

Among the financial causes promoted by education interest groups on nine states' ballots this year, only one--a property-tax-exemption measure in Idaho--went against them.

The big surprise was in Oregon, where hard times in the timber industry have forced school districts and other local government units to rely more heavily on property taxes. In some areas, property taxes have doubled in the past few years, while state support has dropped from 38 percent of total costs to 31 percent.

Although taxpayers' groups had failed in two previous attempts to pass a property-tax-limitation measure, their campaign this year was better organized and better financed than in the past.

That, combined with high unemployment and the rapid rise in property taxes, caused public-education groups and other opponents of the amendment to fear that it would pass this year. Two weeks before the election, polls indicated that Ballot Measure No. 3, as it was called, would pass easily. State education officials predicted that it would cut some districts' revenues by as much as 25 percent, and the state had no surplus to make up the deficits.

Amendment Defeated

But the amendment, which would have limited the property-tax rate to 1.5 percent of assessed valuation (compared with a current statewide average of 2.2 percent), was defeated by about 16,000 votes out of nearly one million cast.

"We're very, very pleased," said Al Davidson, executive assistant to state Superintendent Verne A. Duncan. "[But] there's a message there that we need to listen to. ... Oregon relies too heavily on property taxes, and the 1983 legislature has to look at some sort of relief for property-tax payers."

Possibilities, he said, include redistributing some property-tax revenues from wealthier districts to poorer ones or increasing state aid, perhaps through the imposition of a general sales tax.

Mr. Davidson credited the turnaround largely to the efforts of the state associations of teachers, administrators, and school boards. "They had 10,000 people out on the streets each of the last two weekends, going door to door," he said. "They did a tremendous job."

Another factor, he added, was that opponents of the measure emphasized its possible effects for the state's future economic development and educational programs instead of stressing job security and salary increases for public employees.

"I think that probably people believed what we and others in public office said would occur," he said. "Oregonians have been supportive, particularly of their schools. They want relief, but they didn't want to take that kind of a meat-axe approach."

In Idaho, however, the electorate chose another method of cutting property taxes, and education leaders say it could lead to dramatic revenue losses for schools and other public services.

Initiative 1, placed on the ballot by petition, will exempt from property taxes the first $50,000 of assessed value on residences. The successful backers of the measure say local governments can recoup the lost revenue by taxing commercial and agricultural property.

Increased State Spending

A one-cent increase in the state sales tax, approved by Missouri voters, will provide both property-tax relief and new revenue for school districts. Although some education groups were troubled by what they saw as "technical flaws" in the tax initiative, virtually all the state's organizations of teachers and school officials supported it.

According to state projections, the tax increase will add $153 million to the $733 million in state funds currently distributed to school districts. Most of the new money will support teachers' salaries.

In California, Proposition 1, which authorizes the state to issue $500 million in bonds to finance school construction, narrowly passed with 50.5 percent of the votes cast.

Under the building program, the state will pay for the construction of new buildings, then lease them to the localities. Only $150 million may be used for rehabilitation of existing buildings. In the past, school construction has been financed by issuing private bonds or borrowing from the state, and the debts were paid off by raising local property taxes. But Proposition 13 limits property-tax levels, so districts lobbied for state relief.

More than one-third of California's public-school buildings are 30 years old and in need of repair, and many buildings are overcrowded.

A much smaller school bond issue was approved by Rhode Island's electorate. The $2.6 million in proceeds will be used to upgrade facilities in several vocational and technical schools and to purchase some classroom equipment. About $600,000 is earmarked for a new roof at the state school for the deaf.

State officials had said that if the referendum failed, they would have to request additional funds from the legislature. A state law limiting the annual growth of school-system budgets to 8 percent has hampered districts' efforts to make capital improvements.

Utah will be able to increase its general aid to school districts owing to the passage of the Tax Article Revision, a constitutional amendment placed on the ballot by the legislature.

The state's contribution to districts had been limited to 75 percent of total costs. Since 1978, when the legislature placed strict limits on local taxing authority, schools' dependence on state funds has increased steadily; the state share is now close to 75 percent. With the passage of the amendment, it can exceed that proportion.

Finance Equalization

Voters in West Virginia opened the door for increased state and local spending on public schools with the passage of two tax-related constitutional amendments.

The Fair Educational Opportunity Amendment will permit voters in the state's 55 county school systems to pass "excess levies" and bond issues by a simple majority instead of the three-fifths majority that is now required. The amendment, which lost in 1966 and 1978, is expected to benefit small rural school systems that have been unable to muster the organization to get out a 60-percent majority in past levy elections.

The Property Tax Limitation Amendment fixes property assessments at 60 percent of appraised value, imposing uniformity on assessment practices that have varied between counties, but it also permits the state legislature to pass a statewide property-tax levy to support schools.

Such a levy would have to be ap-proved by a majority of the voters. Its proceeds would be distributed to school systems on the basis of need.

Educational Improvements

State education officials say the amendments may provide a means of paying for an estimated $1.5 billion in educational improvements and equalization of spending ordered last spring by Circuit Judge Arthur M. Recht in a landmark school-finance case.

Court-ordered finance reform also prompted Wyoming voters to approve a mechanism enabling the state to equalize spending among rich and poor districts. Amendment No. 2, placed on the ballot by the legislature, rolls back local school taxes by six mills and authorizes the state to increase its school tax levy by the same amount. The extra funds collected by the state will then be redistributed to school districts on the basis of need.

An Option Rejected

Ironically, in a year when property-tax relief remained popular--if not the rage it was in the late 1970's--voters in Ohio school districts were skeptical of a new law permitting them to support schools through income taxes instead.

The statute, passed by the 1982 legislature, allows districts to substitute local surcharges on the state income tax for more regressive property taxes, with voter approval. Thirty-four of the state's 615 districts offered voters the option this year, but only two districts won approval for the switch. The method of taxation will not, however, affect the districts' revenues.

One possible reason for the rejections, suggested Robert Evans, assistant state superintendent, is that county and municipal governments, which are supported by local income taxes, "took a jaundiced view of schools' moving into their territory" and discouraged voters from making the change.

"And it's a brand-new approach," he pointed out. "It may take some getting used to."

Vol. 02, Issue 10

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