The 10th anniversary of ‘Proposal A? has most local officials singing its praises on behalf of taxpayers, but school officials continue to lament its effect on their budget.
Taxpayers, meanwhile, may have trouble keeping track of the numbers.
‘The concept of Proposal A was admirable,? according to Karen Foyteck, president of the Clarkston Community Schools Board of Education and a member of the board in 1994. However, ‘We still have high disparity. Now we’re sort of caught in a slot, so to speak. The state has never provided what the state has promised.?
What was ‘promised? was relief for property owners and more equity in funding among public school districts. Most believe the first promise was kept, while debate continues concerning the second issue.
When Michigan voters approved Proposal A on March 15, 2004, it set into motion a series of legislative changes:
? Annual property assessment increases were capped at 5 percent or the rate of inflation (whichever is less). While ‘state equalized value? remains at 50 percent of a property’s assessment, Proposal A created a new category of ‘taxable value? to reflect the assessment cap.
? Local property taxes for school operations were eliminated except for an 18-mill ‘non-homestead? property (business, commercial and rental properties and second residences).
‘A statewide 6-mill property tax was instituted for local school operations.
‘The state sales tax was raised from 4 percent to 6 percent.
? While local districts were able to seek voter approval for building issues, the primary form of state aid for school operations became a per-pupil ‘foundation grant? from the state budget.
‘At the time, people felt property taxes were rising at an alarming rate,? Foyteck said. ‘I think there was a sigh of relief,? when the proposal passed.
According to figures provided by the Independence Township Treasurer’s office, the Clarkston school district share of local property taxes was 40.53 mills in 1993 (including both operating and debt retirement levies).
For the past several years, Clarkston school district tax bills have included the state 6-mill levy, a 7-mill debt retirement levy and (where applicable) the 18-mill ‘non-homestead? tax.
Even with the assessment cap, township Treasurer Jim Wenger said there have been increases in assessments and, therefore, ‘People’s taxes still went up.?
Bruce Beamer, executive director for business and financial services for Clarkston schools, admitted the local property tax situation would be even worse without Proposal A limitations.
By his computations, total tax collections in 1993 (including such entities as community college and the intermediate school district) collected $44.1 million. Without Proposal A (and assuming no additional operating millage increases), he believes local tax revenue would now be at least $48.3 million but is really about $23.4 million.
Beamer estimates the owner of a home with an assessed value of $275,000 would be paying an additional $4,063 in property taxes without Proposal A.
‘The taxpayer is paying less tax locally,? he said.
While the benefit to property owners seems apparent, some still question the benefits of Proposal A to local schools.
Figures from the Lansing-based Anderson Economic Group show a 45.2 percent increase in school operating revenue statewide between 1994 and 2001, compared with a 4.7 percent increase in enrollment and a 15.2 percent rate of inflation.
‘Proposal A has its pluses and its minuses,? Beamer said. ‘From a financial officer’s perspective, it affects me quite a bit.?
In addition to state budget problems (which caused a cut in state aid this school year), Beamer previously noted Clarkston’s low standing among Oakland County school districts for per pupil state aid. In the district’s 2002-2003 audit report, Clarkston was shown with a foundation grant of $6,947 per student. Nine districts showed a higher amount, with Birmingham receiving $11, 755 per student.
?[The disparity] has been reduced some, but it certainly has not leveled the playing field,? Foyteck said.
Part of the problem, she said, is the pre-1994 differences in how the state treated local districts. While most districts received limited state aid in addition to their local operating millages, some districts raised enough local taxes to be considered ‘out of formula.? Those districts tended to maintain a high ‘foundation grant? under Proposal A.
‘We were very close to being out of formula,? Foyteck said. ‘Our funding would have been different? in that case.
In addition, the already-existing Headlee Amendment has caused challenges to the 18-mill non-homestead ‘local? tax, Foyteck said. The Headlee Amendment requires governments to ‘roll back? their millages when their total assessed value exceeds the rate of inflation.
The problem, local officials have complained, is the Proposal A formula and the Headlee Amendment created a new issue.
‘They said we must levy 18 mills to get our full per-pupil allowance,? Foyteck said. ‘No one realized Headlee would affect the non-homestead [levy].?
While there have been rumblings of changes to state school financing, no one seems to have a firm proposal on the table.
‘So far, I haven’t heard any proposed tweaks that would solve our problem,? Foyteck said.
Rep. John Stakoe (R-Highland), who represents the Clarkston area, is not among those eager to change Proposal A. He did not hold political office in 1994, but he supported the proposal.
‘You could have considered me one of those concerned about the level of property taxes,? Stakoe said. He believes the sales tax hike was ‘more equitable? than differences in local property tax rates, and he believes the overall impact has been positive for the state.
‘Proposal A is doing what it was meant to do,? he said. ‘There’s always going to be some inequity [among some districts],? but, ‘It’s looking better.?
The only way to increase school funding is to go back to the taxpayers, and Stakoe noted increased local taxes for school building projects. (Statewide, the Anderson Economic Group study shows an increase in school infrastructure revenue of 147.8 percent between 1994 and 2001.)
He believes the state economy is gradually improving, and said the legislature has attempted to protect state aid to public schools.
‘From a legislative standpoint, we have made K-12 education a priority,? he said. ‘It continues to be a priority.?
While uncertain about the impact to the state budget, Stakoe said he could support a proposal from the Mackinac Center for Public Policy to issue tax credits to those donating money to public (or private) schools.
‘It’s a great idea,? he said. ‘I’m very positive toward any tax credits we can provide.?