No to the Max: The New Trend in School District Tax Levies?

not to the maxAt a discordant meeting last night, the Kenosha School Meeting approved a 2.17% tax levy increase.*  The maximum levy allowed under the state budget — after the Governor and Legislature slashed  state aid and lowered revenue limits — was 6.03%.

This trend of not taxing to the max deserves lots of attention, but a few words about the discord first.  The Kenosha case is strange, but the state level refusal to take bold action to reform the revenue and budgeting policies for adequacy, sustainability and equity has shifted many of the cuts and the tax increases to local governing authorities making them the focus of misdirected complaints from both the Right and Left (here is an amazing example from the Right — the blogger is an aide to Senator Mary Lazich, accuses the distict officials of dishonesty based on the state created shift to property tax revenues and also has the gall to call the School Meeting “undemocratic” because only people he disagrees with were in attendance). This frustration needs to be directed at the state officials who can actually enact real reforms).

The meeting described in and the comments appended to this news story demonstrate that the state’s shift of a larger share of under-funding education to property taxes has given the anti-tax crowd a new place to vent and perhaps some new adherents.  What is interesting about Kenosha is that unlike in Washburn —  where the teabaggers came out to protest the mil rate is going up 15% —  there is little or no basis for their sentiments.

The 2.17% levy increase is not large, the resulting 7.37 mil rate is not large, in four of the last eight years the mil rate in Kenosha has been reduced and the 2009-10 mil rate is significantly below the 2003-4 rate of 7.72 and far, far smaller than the 1991-2 rate of 9.54 (all figures from the preliminary June budget).

The gap between the 2.17 mil rate approved and the allowed 6.03 and the $3.5 to $5.0 million in additional cuts mandated by this budget are both large and will have a large, negative impact on education in Kenosha.  These cuts have to be sen in the context of a school funding system that has all but mandated annual program and service cuts for the last 16 years (I am not clear what cuts are being contemplated and it appears that some use of the Fund Balance is likely).

The combination of cuts, property tax increases and  under levies is happening all over the state.  In counties, cities and school districts, most of the attention has been on the first two and few realize that many of  their beleaguered local officials are not taxing to the max.  Even fewer are thinking about what this means in the short and long term.  I don’t know how extensive this trend is, but it is worth keeping an eye on.

School districts that I am aware of who will not tax to the max include, Madison, Kenosha, Appleton, Janesville, New Berlin, Whitnall, Oshkosh (I think), Greenfield (if those who attended the School Meeting have their way), Turner,  and I am sure many I’ve missed and more to come (please let me know of other districts in the comments).

In the short term it means more cuts and often lower Fund Balances (which may lead to higher interest rates for borrowing — see Dane County for example).  In the current economy, more cuts will mean trying to do more with less.  That usually can’t be done and certainly cannot be sustained.  It means closing schools and limiting educational opportunities, it means not filling potholes and plowing streets, it means telling the cold, the disabled and the hungry “no,” it means that investments that would form the basis of future prosperity aren’t being made, it means less safe streets, delayed infrastructure, and lowered expectations for the present and the future.  This is what is happening every day at every budget hearing.

I am not clear on the mechanisms for any adjustments that are made to state aid due to levies that are below those anticipated.  I’ve got a couple of queries out and will pass along the wonky details as soon as I am able.

Cuts and lower levies this year will also shape the perceptions of budgets and levies in future years.  Every cut that officials make regretfully, every fiscally based redefinition from essential to discretionary, every abandoned cost of living adjustment, every potential investment to create growth that is passed over…provides ammunition to those who rail against activist government, those who refuse to recognize that government is the mechanism by which a humane society cares for the neediest, an engaged society shapes the present, and a wise society invests in the future.

The precedent of smaller levies will make future levy increases seem larger.  In Madison, the current plan is to split the huge two-year levy increase into two very large levy increases, with the first (this year) being well below the allowed amount (such bad choices, there is no good way to handle this).  This make a certain kind of sense from both a policy and a public relations perspective.  Still I worry about the message, the precedent, the impact and even the public relations.  On the last, part of me says just get the worst of it over with, enact as much as you can this year, take the heat and move on.

Fiscally, school districts that do not levy to the max for two consecutive years lose that authority in the future.  Their future levy limits are based on the lower amounts actually levied.  Madison will avoid this by levying the general fund to the max and cutting the debt service levy (if I understand correctly).  Other district may not have that option, so the underfunding will be compounded in future budgets.

As I’ve said in past posts, the shift to property taxes is wrong and I have sympathy for those are saying “this is too much” and asking local officials to limit their levies.  I also have sympathy for the local officials who are hearing those voices and limiting their levies.  I just want all who are involved to act with an awareness that this is a partial and temporary solution that is harmful in many direct and indirect ways.  I’d also like all those involved to join those of us pushing state officials to take the steps that only they can take to get us out of this destructive cycle.

There is one more thing I’d like and that is to see our State Senators and Members of the Assembly attending the county, city and school budget meetings; hearing the voices that cannot penetrate the closed doors where they cut their secret deals; witnessing the local officials struggle with the hard choices the state officials largely avoided (read Brenda Konkel’s report from one of these meetings: “Raise My Taxes!“); and maybe, just maybe explaining to one and all why they believed their work was something to boast aboutSenator Fred Risser and Representative Mark Pocan, consider this a personal invitation from one of your constituents who has supported you in election after election.

Thomas J. Mertz

*KUSD is one of the districts in Wisconsin that continues the old tradition of the Annual School Meeting handling budget approvals.

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Filed under "education finance", Budget, education, finance, Local News, School Finance, Uncategorized

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