With Mich. Vote Comes the Inevitability of Change
Michigan voters, who have grown familiar with being called to the polls to consider state tax increases for education, will make their way there again next week to ponder the issue with a new twist.
The matter at hand will not be whether the state should simply make a change. This time, it is a question of how.
State lawmakers, frustrated last year after voters again turned down a sales-tax increase, responded by wiping out property taxes and drafting two solutions.
Voters will decide on March 15 whether they favor a plan that substantially reduces local school property taxes, replacing the lost revenues with a sales-tax increase at the state level.
If they turn that plan down, an increase in the state income tax automatically takes effect.
Talks with voters in this industrial city and its suburbs suggest that many residents like the idea of shifting the burden of school costs to the state. And a majority seems more inclined to pay for the change by way of their purchases instead of their paychecks.
A Unique Calm
The unique situation has generated a calm among education lobbyists and school officials, who for the first time say they will let voters decide how to fund schools without spirited urging.
"I have been on five campaigns in five years,'' said Tom White, the government-relations director for the Michigan Association of School Boards. "This is the first time we haven't taken a position. But, before, the choice was between the status quo and change.''
The question at the polls, known as Proposal A, would raise the sales tax from 4 cents to 6 cents. The school portion of local residential-property taxes, which was wiped out by lawmakers last year, would be set at 6 mills, a vast decrease from the current state average of 37 mills. The ballot plan also includes a host of smaller taxes, including a large increase in cigarette taxes.
The other option, which voters would effectively choose by casting a "no'' vote, would increase the state income tax from 4.6 percent to 6 percent. The fallback plan would set local residential-property taxes at 12 mills. Among various other tax increases, the proposal would call for a smaller jump in the cigarette tax.
Both plans would raise the transfer tax on real-estate sales.
In return, the state under either plan will take over a larger share of school funding, more than doubling its current $3.6 billion funding for schools. In addition, per-pupil funding will rise to $5,000 in every school district within five years. The state's poorest districts will be funded at $4,200 per child beginning next year.
The law also includes a host of school-reform measures. (See Education Week, Jan. 12, 1994.)
'We Pay a Lot'
In the downriver suburbs outside Detroit, potential voters expressed little irritation with the upcoming choice between higher state taxes and higher state taxes.
Sorting through a stack of real-estate listings, Paul T. Endres, a broker, notes that most people think the state's leaders were right to address the problem of high property taxes.
"There is one old couple that just listed their house for $208,000, and they were paying $6,800 in property taxes even though they only make about $25,000 a year,'' he said. "We pay a lot.''
While admittedly not a close follower of the legislature's work, Mr. Endres said he will vote for the sales-tax increase despite a host of concerns.
"It's not as great a deal as many people are saying,'' he said. "I don't like the idea of the state getting more involved in schools.''
"There's a lot of talk about waste, like with the lottery money that was supposed to go to the schools and ended up in the general fund,'' Mr. Endres observed. "And a lot of people say they will just slowly raise the property tax back up because even though they said they were abolishing it, they're not really sticking to that.''
Faced with the choices, however, he said he will cast his vote based on the assurances of Gov. John Engler and the sentiments of people he has talked with.
Raising income taxes could hurt the state's business climate more than boosting the sales tax, Mr. Endres suggested.
"Our state has got enough problems,'' he said. "If we do too much, companies will start moving out.''
'Out of Control' Property Tax
In nearby Taylor, Mich., Dan McAnulty said he will vote for the sales-tax increase even though the blue-collar customers at his hot-tub showroom will have to pay more.
"My customers are going to have to pay 50 percent more in taxes, but all in all, it is a good thing,'' he said. "If that's what it takes to make the schools right, I'm for it.''
On an average $3,000 sale at his store, the sales tax would rise from the present $120 to $180 if the ballot proposal wins.
"It's not like a couple of cents at the drugstore when you're buying gum, but I don't think it is a big issue,'' Mr. McAnulty said.
"The property tax is way out of control,'' he contended. "Where I live, it's not a problem, but over here in Dearborn Heights, my God, it's terrible.''
"It is better to pull money out of something we're not tapping,'' he continued. "They're not going to put the sales tax on gas, food, or other necessities, so it is more of a voluntary tax. To nail people with property taxes because we're spending our money too fast is not right.''
Back to the Drawing Board?
Polls currently show about 60 percent of voters favoring the sales-tax option, with 20 percent opposed and 20 percent undecided.
The education group taking the strongest stand is the Michigan Education Association, which opposes the sales-tax plan. The teachers' union plans to contribute $500,000 to a coalition against the ballot measure that includes other unions and the state's League of Women Voters.
M.E.A. officials say their work is in support of the income-tax alternative, which other education groups agree offers a more promising long-term funding source. The union argues that Governor Engler and other sponsors have already trimmed the sales-tax plan.
"The revenue from the ballot plan is already shrinking,'' said Kim Brennen Root, the M.E.A.'s communications director. "We have a long-term concern about stability. We don't want to have to go back to the drawing board in two or three years.''
While other education groups have stayed in the background, they agree that the fallback plan provides both the biggest revenue base and the brightest long-term prospects for school funding. But most of all they seem relieved to be spared another round of going to voters and asking for more money.
"The system is improved and we've turned things around as far as school funding,'' said Mr. White. "We are glad to be taking this one down the middle.''
Political observers may see the ballot measure speaking more about
voters' confidence in Mr. Engler, who is up for re-election in the
fall, than about their views on tax policy or school finance. The
Governor has stumped ceaselessly in behalf of the sales-tax increase,
leading a campaign financed largely by the state's top
Vol. 13, Issue 24