Governors' Races Put Property-Tax Reliance to Test

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Next week's gubernatorial elections may provide a significant signal of the public's willingness to consider alternatives to the property tax as a primary method of funding the schools.

In two states, New Hampshire and Montana, Democratic candidates are running for governor on proposals to create new statewide taxes in order to reduce reliance on local property taxes and provide increased funding for the schools.

In the face of the public's continuing anti-tax mood, the fact that both contenders have a chance of winning suggests that voters may see new or higher sales or income taxes as preferable to ever-rising property-tax bills.

The outlook is most remarkable in New Hampshire, where Rep. Deborah L. Arnesen is running on an income-tax platform that, in past years, would have been certain political suicide in the state.

In Montana, Rep. Dorothy Bradley is pushing for a 4 cent sales tax, with revenues also to be used for property-tax relief and education programs.

Both candidates face tough Republican opponents, and their tax platforms may yet prove their undoing. Moreover, even if they do win, it may be because of the broader economic concerns that appear to be boosting their fellow Democrats at all levels this year.

Still, the New Hampshire and Montana races have provided the most prominent profiles for education issues in the 12 gubernatorial contests this year.

As was true in 1990, when 36 governorships were up for election, the nation's economic problems and the states' fiscal woes have effectively discouraged most candidates from offering major new education initiatives if they involve spending substantial amounts of money. (See Education Week, Oct. 31, 1990.)

'A State of Disrepair'

Ms. Arnesen and her Republican opponent, Steve Merrill, a former state attorney general, are seeking to replace the Republican incumbent, Gov. Judd Gregg, who is running for the U.S. Senate.

Ms. Arnesen's platform calls for a 6 percent income tax on middle- and upper-income taxpayers, with the stipulation that 75 percent of the revenues raised would go to local property-tax relief. New revenues would also go to increase education funding across the board, reduce funding disparities among school districts, and cut and restructure business taxes.

Observers say one major reason that New Hampshire voters now seem willing to consider Ms. Arnesen's tax ideas is the heavy burden of the property tax, which currently provides nearly 90 percent of school revenues. Many residents who moved to the state as a "tax haven'' with no income or sales taxes now are finding themselves in some cases paying up to 20 percent of their income for property taxes.

Ms. Arnesen also argues that the current tax system has worsened the state's already serious economic problems. The state is suffering from chronic underinvestment in the schools and other social needs, she says, creating a "state of disrepair'' that is increasingly unattractive to new businesses.

Mr. Merrill, by contrast, opposes instituting a state income tax or any other broad-based tax and generally supports keeping the existing education-finance system.

More Spending Seen

The Republican candidate contends that Ms. Arnesen's tax plan would foster increased state spending without reducing property taxes.

"No other state that has adopted an income tax has been able to lower property tax,'' said Glenn L. Wallace, a policy adviser to Mr. Merrill. "Representative Arneson has many, many spending proposals that she has put forth that would eliminate any revenue raised by an income tax.''

The two candidates also differ over the state board of education's proposals to eliminate many minimum state standards imposed on school districts. Ms. Arnesen has strongly opposed the changes, accusing the board and Governor Gregg of displaying "utter contempt for public education,'' while Mr. Merrill has backed the deregulatory efforts. (See Education Week, Oct. 7, 1992.)

But, with Ms. Arnesen tied or trailing by slim margins in recent polls, analysts say the outcome is likely to hinge on the balance between voters' current distress and longstanding distaste for statewide taxes.

"What we don't know is to what extent the unemployment here in the state and the general unease of the citizens about the status of the economy will be sufficient to cause some traditional Republican voters to move away from the no-tax-pledge candidate in favor of a candidate who's proposed a state income tax provided that it's used to give property-tax relief,'' said Commissioner of Education Charles H. Marston.

Funding Disparities Targeted

In Montana, Representative Bradley faces Attorney General Marc Racicot, a Republican, in a battle to succeed retiring Gov. Stan Stephens.

Ms. Bradley describes her sales-tax proposal as part of a comprehensive plan for revising the state's fiscal structure in order to stimulate economic development.

The proposal would raise an estimated $340 million in new state revenues. Of that amount, Ms. Bradley would use about half to finance reductions in property and other taxes and for aid to local governments.

In addition, the proposal would provide $105 million in new funding for education, with some of the money to be used to reduce disparities in per-pupil spending among districts.

School-finance equity is a major issue in Montana, where the funding system was struck down by the courts in 1988 and remains under a court challenge from low-wealth districts.

Mr. Racicot also favors a 4 cent sales tax. But he would reserve the new revenues for tax relief and to solve the fiscal problems that have created repeated budget shortfalls in recent years.

Mr. Racicot also has a plan to reduce spending by the state government by $40 million a year, the burden of which Ms. Bradley contends would fall on education.

Other Contests

Other states in which education has become an important issue include:

  • Missouri. Attorney General William L. Webster, a Republican, and his Democratic opponent, Lieut. Gov. Mel Carnahan, are divided over ways to pay for costly court-ordered school-desegregation plans in St. Louis and Kansas City. (See Education Week, Oct. 14, 1992.)
  • North Carolina. Next week's elections may see a return to power by former Gov. James B. Hunt Jr., who has been an important figure on the national education-reform stage both during and since his two terms as Governor from 1977 to 1985.

Mr. Hunt was a leader in the first round of state education-reform efforts in the early 1980's, and currently serves as the chairman of the National Board for Professional Teaching Standards.

Mr. Hunt, a Democrat, is leading his Republican opponent, Lieut. Gov. James C. Gardner, in the polls.

In his campaign, Mr. Hunt is promising to raise standards and hold schools accountable, give employers who employ graduates a "money-back guarantee,'' and cut the state education bureaucracy.

Mr. Gardner says he would abolish the state's Basic Education Program, which was launched in 1984 under Governor Hunt to equalize course offerings, class size, and staffing levels in schools throughout the state. Mr. Gardner also wants to establish a council of 100 to 200 teachers to determine the future of education in the state.

  • North Dakota. Education issues could be a major factor in deciding a close race between the G.O.P. candidate, Edward T. Schafer, and Attorney General Nicholas Spaeth, a Democrat.

Both candidates have issued unusually detailed education platforms. Mr. Spaeth has a 15-point education proposal that includes a call for more cooperation and consolidation between school districts in the thinly populated state, while Mr. Schafer's seven-point plan calls for strengthening instruction by implementing a "balanced statewide curriculum'' and by promoting interactive television and a statewide computer network.

One key difference between the two is over the issue of binding arbitration for teacher contracts. Mr. Spaeth, who has the backing of the North Dakota Education Association, supports the idea, while Mr. Schafer opposes it.

North Dakota voters this summer rejected a binding-arbitration law, however. Analysts say Mr. Spaeth's support for the measure--and ties to the teachers' union--could hurt him. "When you have a high-profile election, I don't think that is going to be a great help,'' said Phil Harmeson, the director of the bureau of governmental affairs at the University of North Dakota at Grand Forks.

  • Rhode Island. Gov. Bruce Sundlun, whose state has struggled with severe fiscal problems during his term, goes into the election without the support of a powerful Democratic ally, the National Education Association Rhode Island.

The teachers' union has been sharply at odds with Mr. Sundlun over money issues, faulting him for failing to move toward having the state provide at least 50 percent of school spending. The union backed a challenger to Mr. Sundlun in the Democratic primary, and decided this month not to endorse either the incumbent or his Republican opponent, Elizabeth Ann Leonard.

  • West Virginia. Although he has the backing of both state teachers' unions--and a wide lead in the polls--against the Republican candidate, Commissioner of Agriculture Cleve Benedict, Gov. Gaston Caperton may also find himself with a significant teacher problem.

Sen. Charlotte Pritt, a 15-year veteran as a secondary school teacher, this month announced as a write-in candidate. Ms. Pritt made a strong bid against Mr. Caperton in the Democratic primary, winning 34 percent to his 43 percent.

Ms. Pritt, who favors collective bargaining for teachers and other state employees, has criticized the teachers' unions for not backing her campaign. "Good-old-boy cronyism has wrecked the respectability of the unions,'' she contends.

Vol. 12, Issue 08

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