Broad Coalition in Michigan Backing Tax Reform and Finance Amendment

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An unusually broad coalition in Michigan is urging voters next week to tackle the state's long-running problems of high property taxes and unequal school spending by linking them together under the banner of statewide tax reform.

State voters on June 2 will consider a proposed constitutional amendment, known as Proposition A, that would limit property taxes and provide increased state funding to poor school districts, while increasing the sales tax.

The plan has the support of business and education groups and the bipartisan political leadership.

Although they face no organized opposition, backers anticipate it will take all the efforts of their historic coalition, with its $1.5 million bankroll, to achieve success. They see their chief obstacle as voter cynicism about government promises of tax reform and schools' demands for greater funding.

As the campaign entered its final stretch last week, officials were enjoying solid editorial support and increasing strength in the polls and preparing for an advertising blitz that will continue through election day.

Backers said, however, that they were anything but content as the campaign drew to a close. As unsuccessful statewide school-finance measures in Illinois and Texas in the past year have shown, winning over skeptical voters is a difficult job.

Moreover, plans similar to next week's measure were rejected by Michigan voters in 1989.

"We're just breaking our necks to get the word out,'' said Ken MacGregor, the field coordinator for the Michigan All-Star Team for School and Tax Reform.

As approved by the legislature in late March, the amendment would roll back local property taxes to 20 mills, a substantial drop from the state average of 35 mills. Annual increases in property assessments would be limited to 5 percent or the rate of inflation, whichever was less.

The decreased reliance on local taxes would be made up by raising the sales tax from 4 cents to 6 cents.

Grassroots Focus

In addition, the measure would guarantee each school district $5,000 in per-pupil aid, up from a $4,200 state average. (See Education Week, April 7, 1993.)

The proposal, which was initiated by Gov. John Engler, moved quickly through the legislature with broad support. To head the statewide campaign for voters' support, Mr. Engler tapped Phillip Runkel, a retired state schools chief.

Mr. Runkel has worked to focus the campaign as a local issue. Describing the election as similar to local millage votes, he has sought to build grassroots organizations.

The campaign has become highly focused on explaining the details of the proposal, rather than on simply encouraging voters to get to the polls. The campaign's fate rests with the success of its local organization, said Mr. MacGregor, who is on loan from his job as legislative liaison for the Michigan Education Association.

"We've got to have it at the grassroots because of the time frame--we've only had about 30 days,'' Mr. MacGregor said. "But with moms and dads and teachers and school boards and chambers of commerce and realtors working together, we have a tremendous effort.''

In addition to virtually every major school organization, the coalition includes municipal officials, the farm bureau, small and big businesses, and hospital executives.

Officials also point to the cooperation of top Democrats with Governor Engler, a Republican who is seen as having a great deal staked on the amendment politically.

'We've Got To Do Something'

Michigan's twin problems of high property taxes and inadequately funded schools received national attention in March with the closing of the Kalkaska schools. There, after voters rejected a tax levy, district officials ended the school year early. (See Education Week, March 31, 1993.)

Many districts across the state are nearing property-tax millage ceilings, officials said, and others are on the verge of a budget crunch that could create more Kalkaskas.

"We've got to do something,'' said Mr. MacGregor, echoing a theme heard often in the campaign.

Another popular slogan has been, "It's not a perfect plan''--a theme meant to convey the message that state leaders feel they have reached the best possible compromise.

Organizers emphasized the importance of winning the understanding of voters. Because the amendment is the only item on the special-election ballot, motivated voters will be chief among those at the polls.

Among the measure's detractors are state anti-tax groups. In addition, some labor groups have focused on the regressive nature of sales taxes, arguing that the proposal is unfair to low-income residents.

Finding Common Ground

Most school officials, however, see little to fault in the plan.

"Proposal A will help turn around a finance system that has been languishing for years while disparities in funding have increased dramatically, leaving poor schools poorer and wealthy schools wealthier,'' said Barbara Roberts Mason, a member of the state board of education.

Members of the state board, in addition to Superintendent of Public Instruction Robert E. Schiller, have been stumping for the plan.

An example of the business-education alliance backing the plan was a speech given by Gerard Keidel, the executive director of the Michigan Association of School Administrators, before a regional group of commercial-trust bankers last week.

Educators and other state groups have finally found common ground in arguments that property taxes have been stretched too far and that relief and stability are badly needed, Mr. Keidel argued.

"This is by far the best thing we've seen come down the pike,'' he said.

But campaign leaders find little confidence in the unprecedented array of support they have lined up.

One factor that could influence voters against the plan concerns federal income-tax deductibility. While property levies are deductible on federal returns, sales taxes are not. Thus, a shift from property to sales taxes could leave some residents with higher total tax bills.

"This is still tough,'' Mr. Runkel explained, "because there is a lot of mistrust of government.''

Vol. 12, Issue 35

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