ISTA proposes 'real school property tax relief' without harming programs
The current property tax relief plan under consideration by the Indiana General Assembly will not work — either for homeowners or for public school instructional programs. However, it is possible to provide homeowners with real school property tax relief without sacrificing instructional programs.
Public school instructional programs depend on more than $1 billion of property taxes each year. These property taxes are stable revenues necessary to reduce class sizes; support full-day kindergarten; provide free textbooks for low-income families and expand extra learning opportunities for students who need more time and attention to master the state's mandatory academic standards.
Proposals to completely eliminate school instructional property taxes will not work. State revenues are already more than $200 million behind revenue projections. During the last economic slowdown, state revenues allocated to the school funding formula were decreased.
Yet, school instructional program property taxes are not the cause of any current property tax problems. The General Assembly has strictly controlled school instructional property taxes, resulting in the school instructional program property tax levy being the slowest growing of all local government property tax levies. Eliminating school instructional program property taxes will not help homeowners and will harm valuable programs necessary to improve student learning. Homeowners and students will both lose.
The real problem with school property taxes is school construction. Currently, property taxes provide nearly $2 billion annually for school construction and repair projects. The school construction property tax levies are the fastest growing of all local government property tax levies.
The Indiana State Teachers Association proposes that Gov. Daniels and the General Assembly establish a School Construction Quality and Accountability Fund. State taxes should replace property taxes for up to 70 percent of school construction costs to build sufficient classroom space, install air-conditioning and modernize science labs, libraries and instructional technologies. The current system of school construction does not work well either for homeowners or for schools. Some schools are state-of-the-art and other schools do not have air-conditioning, modern science labs or up-to-date technologies.
The current system of financing school construction almost completely with property taxes does not treat taxpayers fairly. School construction debt tax rates vary from as little as 20 cents in some school corporations to more than 90 cents in other school corporations.
Two years ago, Gov. Daniels had a good idea. His executive order states that, "School building projects should first and foremost support the academic needs of the student population; as school officials consider construction projects, the primary focus should be on enhancing academic programs and limiting non-academic space."
Fifteen states — including Ohio, Illinois and Kentucky — already replace nearly half to all property taxes for school construction. Lawsuits have been filed in 37 states because school construction based predominantly on property taxes results in unequal and inadequate facilities that disadvantage poor communities and imposes unfair tax burdens on homeowners.
Both homeowners and students deserve fair treatment. There is still time for Gov. Daniels and the Indiana General Assembly to enact real and responsible school property tax reform.
Nate Schnellenberger, Pres. ISTA, and Warren Williams, Ex. Dir.
February 27, 2008