Lesley Stedman Weidenbener has a column about the recent news about tax revenue falling short of projections and where cuts might come from. She points out that most of the state’s money is spent on schools, prisons, and Medicaid. The governor has indicated an unwillingness to cut on prisons — which would likely have to involve releasing inmates. Medicaid is structured as an entitlement, meaning it’s driven by the number of people who satisfy the qualification criteria which makes it difficult to impose percentage based spending cuts. This puts education in the cross-hairs.
There was a time when the operating budgets for public schools came largely from property taxes. But in order to cut property taxes and to start leveling funding among districts, the state began taking over more and more of the education budgets.
Then last year, when the General Assembly passed a massive overhaul of the property tax system, the state took on the total responsibility for school operating funds.
That means school general funds are paid for primarily with income and sales taxes, which are two revenue sources that can be wildly volatile in a recession.
Ms. Weidenbener points out that this downside to relying on sales and income taxes as opposed to property taxes was predictable. In fact, it was predicted. Marty Lucas said:
Sales and income revenues vary significantly with economic conditions too, and drop quite a bit during recessions. Government needs to be able to continue providing services during a recession. Real estate taxes are more stable.
He wasn’t the only one making this point, it was a significant theme in the debate about whether to shift from relying on property taxes to other kinds of taxes. But, we’ve picked this poison, now our education is almost certainly going to pay a price.
With the current approach to education subsidies in K-12 (to schools rather than parents), we already put educators way ahead of education and students. Why get all that excited about this?
Eric —not worthy of reply.
Then why reply? ;-)
One school of thought believes it would be effective to pour even more money into government-run entities with somewhere between significant and complete monopoly power. (Why isn’t more than $200K enough to educate the average classroom of 20 students?) The other school of thought believes that a system with competition would be more effective.
You’re correct: There is no reply worth making!
No your posting is so far beyond my perspective that it is clear that dialogue is not in the cards.
mitch was told that relying on sales and income tax funds was dangerous and volatile, he was given the information from Michigan which switched to such a system and went right into the hole. It still has not recovered fully. But mitch wants to take away any local control of schools. He wants to dictate what they can spend the money on and with whom they can spend it.
His next effort is to do away with locally elected school boards. And consolidation still lurks around the corner. Do not confuse mitch with the facts, he will have his way.
Pretty much par for the course for NMMM. He’s all about centralized government and Indianapolis control of local entities. Reality is, if Indiana becomes a state full of people with associate degrees (or less) as NMMM seems to want, there won’t be much income and sales tax to draw from no matter how the economy is doing.