West Virginia Voters Weigh Tax System's Fate
As West Virginians prepared to vote late last week on a proposal that would drastically alter their property-tax system, they were pondering two new state Supreme Court rulings that strongly signaled the court's continuing dissatisfaction with the way the state finances public education.
On Feb. 23, the court struck down the $1.49-billion state budget for the current fiscal year, holding that it failed "to vindicate the constitutional mandate for a thorough and efficient public-school system."
The West Virginia Education Association had filed the suit challenging the budget, claiming that its $754.5-million appropriation for basic state aid to schools fell some $13 million short of meeting districts' needs.
A day after its decision on the budget, the court also declared unconstitutional a 1985 state law intended to help equalize teacher salaries among districts. The justices held that the law unfairly penalized two districts whose voters had approved "excess" property taxes prior to 1984 but had since rejected them.
The court's rulings marked the latest development in a decade-long series of legal maneuvers to force a fundamental change in the school-finance system.
A key step in that process was set to be taken last Saturday, when voters were to decide the fate of a proposed constitutional amendment to change the property-tax system.
Observers in the state said last week that voter sentiment on the matter appeared equally divided, making it impossible to predict the outcome of the election.
Currently, county districts are permitted to levy a portion of their property tax without voter approval. They can also seek voter approval for an "excess" levy that can be as much as 100 percent of the non-voter-approved millage.
Results in Disparities
The existence of the excess-levy option has been at the heart of the state's school-finance controversy.
Critics of the current system say it results in wide spending disparities between districts where excess levies are approved and those where they are not, thus violating the state constitution.
In 1982, State Circuit Judge Arthur Recht declared the current school-finance system unconstitutional. But instead of resolving matters, his ruling set off intense political and legal battles that have stymied reform efforts ever since.
At present, 29 of the state's districts have 100 percent excess levies, 1 has a 90 percent levy, 13 have levies ranging from 89 percent to 44 percent, and 12 have no excess levy at all.
The amendment before voters would establish a 90 percent excess levy in all districts, thus forcing about half to reduce their local property-tax effort and the other half to increase theirs.
Special Judge Larry Cook, who8took over the landmark school-finance case from Judge Recht, has said that if the amendment is rejected, he will assume control of the state's school-aid system and begin redistributing funds to districts that do not have excess levies.
The state high court has deferred a ruling on the constitutionality of Judge Cook's proposed action pending the outcome of the special election.
Taxes Without Benefits
The threat of a judicial takeover of the state's school-finance system makes passage of the proposed tax amendment imperative, said Becky Cain, campaign coordinator for Citizens for Progress Through Education, which represents educational, business, labor, and civic organizations.
If the amendment is rejected, she said, "we'll be left with a system that will allow taxpayers in some areas to pay more taxes but not receive the benefits of those increased revenues."
"People will not vote to raise their property taxes if they know that the money is going to be spread statewide and spent in counties where the citizens have not agreed to raise their taxes," Ms. Cain said. "As a result, we stand to lose about $120 million in locally raised school funds. That's money for textbooks, transportation, libraries, and salaries. Those aren't extras, they're essential."
"It's time to put our educational house in order and remove the constitutional flaw that creates inequities among districts," she added. "We cannot afford to continue relying on a hodgepodge in which some children are afforded opportunities and others are not."
'Not a Boost'
Opposition to the amendment is being led by the West Virginia Tax Study Association, which represents "ordinary taxpayers from all walks of life," according to Michael Ross, the Buckhannon businessman who heads the organization.
"It's a matter of imposing additional taxes at a time when an awful lot of West Virginians can't afford them," he said. "We have a tremendous amount of unemployed people in this state. We have a tremendous amount of business people who are struggling to avoid bankruptcy. Imposing higher taxes on these people is certainly not going to give them a boost."
Mr. Ross said the 12 county districts that have failed to approve excess levies "typically have high unemployment and low per-capita income."
"These are people who can't afford the drastic tax increase" that the amendment would require, he continued. "Certainly, we support doing all that we can for our kids and providing them with the best education possible. But we have to ask ourselves, 'What can we really afford?"'
"Since 1955," he added, "the state has lost about 170,000 students but the education budget has gone up some $650 million. Revenue isn't the problem; it's overspending. We continued on Page 12
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don't see that we're getting the most of our tax dollars now."
Supreme Court Rulings
The existence of the excess-levy option was a key factor in the state high court's decision to strike down the 1985 law that provided districts with teacher-salary supplements.
The measure, which was passed in response to Judge Recht's ruling three years earlier in the finance suit, based the supplements to districts in part on the status of their excess levies as of the start of 1984.
Districts that had no levies at that time and did not approve them later experienced no change in their state aid. But districts that had levies in place as of 1984 but subsequently saw them rejected by voters had their salary supplements decreased.
Two county districts in which excess levies were defeated at the polls filed suit, claiming that the distribution formula "perpetuated the inequalities" that the law was intended to abolish.
"The case now before this court is illustrative of the classic problem arising when the financing of a school system is based, even partially, on the passing and retention of excess levies," wrote Chief Justice Thomas McHugh for a unanimous court. "The system of allocation is impermissibly based upon a county's ability to maintain an excess levy. Clearly, this factor bears no relationship to educational needs."
In the second case, the Court declared the state's fiscal 1988 budget unconstitutional because it failed "to appropriate sufficient dollars to fund the basic [school] foundation program."
"[T]he petitioners are correct in their premise that the ... budget does not comport with the legislatively established public policy, which is presumed to vindicate the constitutional mandate for a thorough and efficient public-school system," the court held.
In the first case, the court gave the legislature and governor until July 1 to revise the salary-supplement program. In the second, it gave them until April 23 to revise the current state budget.
Vol. 07, Issue 24