Duplicitous Tax Policy (edited)

*I updated this with a couple of edits for clarification (in bold).

Background on this comes from the local pravda (Davis School Board eyes tax hike):

The Davis Board of Education is seeking public input at its Aug. 7 meeting. The board is considering voting to expand its Voted Leeway property tax to the maximum limit allowed — something that could bring about $2 in state funds for every local dollar raised.

What that means for Davis schools is if the county pulls in an increase of $1.87 million in property taxes, then an additional $3.5 million will come from state tax monies. That’s money which the board members agreed the district could not afford to lose. [since taxing agencies constantly find times when it could “afford to lose” more tax money?]

…The increase would actually boost four tax levies, the Voted Leeway, Board Leeway, Reading Achievement and Transportation, said Williams.

The Voted Leeway Levy is used for general supplies, textbooks, computer equipment and to fund the capital impact of new schools on the operating budget. If the increase is approved, it would generate $1.3 million for the district. If it is not approved, the district would lose $2.7 million, Williams said.

The Board Leeway Levy is earmarked for class-size reduction. This levy would generate $331,000 if approved. Without it, the district would lose $683,000.

If the board approves the local tax increase, it would mean homeowners would pay an additional $17 a year on a $190,000 home…

Firstly, I would dispute the use of “the district would lose…”. They won’t lose anything, the money would (should) simply be returned to it’s owner – Utah taxpayers. This tax increase also comes a year after the district was given a big municipal bond. The $230 million bond (for the Davis School District only), precluded a reduction in taxes that would have been returned to taxpayers from the payment of other bonds.

On to why this policy is duplicitous. Essentially this, ‘you raise taxes by X, and we’ll give you $2 for every dollar you collect’ scheme, seems to be a way (attempt) for politicians (legislators) and bureaucrats (school board and district) to wash their hands of responsibility for the tax increase. If citizens complain to one, it points at the other. This allows a for circular blame game with all taxing parties ducking responsibility. This also lets our purportedly ‘conservative’ legislature claim they didn’t raise taxes and oppose tax increases while, at the same time, they put out big incentives for local authorities to raise your taxes.

In my opinion, the legislature should directly allocate the money or return it to taxpayers and school districts should try to raise taxes on us by themselves. In the meantime, in my book, they don’t share responsibility, the each get 100% of it.

Davis County Watch has also picked up on this and brought up something I missed regarding government vs private budgeting.

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7 thoughts on “Duplicitous Tax Policy (edited)

  1. Pingback: Jeremy’s Jeremiad » No Whiners! We Need To Pay Our Share Of School Costs

  2. I knew I took a risk by not addressing the “it’s only fair for schools to raise local taxes to get state money” argument for the sake of brevity. The above blog makes that argument. I’ll try to keep this brief too (maybe I’ll do something more at some other time).

    My take is that it is anything but sound conservative fiscal policy to incentivize a tax-and-spend mentality with the current policy. If local schools need money, they can go ahead and raise taxes on their own (make the case to their community/direct users).

    If the state (legislature) believes there is a statewide need or local area needs that can not be met without state funding (trust me school districts and their lobbyists will make that plainly clear at the legislature), legislators are welcome to provide that funding to qualifying schools.

    Instead, a large chunk of money is dangled in front of districts with the message that [start infomercial voice] it is a time-limited offer and failure to act may result in a missed opportunity… [end voice] The catch? Increase the burden on families (especially low income), charities, churches, and small business etc even if you don’t really need to (ie don’t need the extra funding right now or it is sufficient without raising everyone’s burdens). Operators are standing by…

    Like I said, a bad incentive by those claiming to be conservative lawmakers who oppose tax increases.

  3. Since the “It’s only fair for schools to raise local taxes to get state money” argument makes a lot of sense it seems a little questionable that you didn’t bother mentioning it in your original post.

    The responsibility for funding public schools has to be shared between the state and the local school districts. Good fiscal policy requires that districts raise their fair share of the burden locally before the state’s part of the funding kicks in. It would be pretty irresponsible of the state to pass out taxpayer money without ensuring all parties are correctly working within the system to ensure funding burdens are distributed according to the law.

    If you’d like to enlighten your understanding of how school funding works I’d recommend you check out the Utah Taxpayer Association blog. They’ve done a good job explaining weighted pupil units and the various sources of public school funding in the past couple months worth of posts they’ve put up.

    You also might want to consider that charities and churches don’t pay property taxes before ranting about property tax increases. Low income families often qualify for abatements which exempt them from property taxes as well. In Davis County corporate properties are woefully under-assessed (compared to residential parcels) and they have been making out like bandits on property taxes for the past couple decades…so they aren’t hurting so badly either even with this minute increase.

    Finally, since you seem to want to avoid a long discussion in this post we’ll hold off for now on talking about how incredibly underfunded our schools are and how asinine it is to gripe over legitimate efforts to attempt to remedy the problem.

  4. First, you are correct regarding the property tax issue and charities (I was thinking sales taxes and municipally-owned power rates). Sorry about that – good catch.

    I stand by my argument that this is not sound policy. Sure, locals should chip in. Again, school districts may do so (and have) as needed. However, I don’t think the legislature needs to ‘incentivize’ tax increases for their funding. Again, school districts and their allies have lobbyists up on ‘the Hill’ who can persuasively argue that they have a need for more funding and can argue that the local tax burden is already sufficiently high to consider the community putting in their ‘fair share’. Legislators may then either propose the additional funding or dismiss it, if they feel the districts are not in true need of additional state funding. Further, funding could also be delivered on a criterion based method (ie not a ‘one gets, all gets’ mentality).

    Regarding your final point, schools are always ‘underfunded’ no matter where in the country you are. Here, they have recently been given a huge increase in a state with tons of children and lower than average incomes. Ultimately, I feel parents are a much greater deciding factor in a child’s education than the amount of money thrown into a governmental system. Like you, I don’t have the time to debate this big issue in perpetuity, but hope you would be open to vouchers as an aid to curtailing the future funding shortfalls of public education due to the expected influx of new students (allowing a relatively small percentage of students to be placed in private schools would reduce infrastructure etc costs, while still providing schools at least 50% of the money for each student).

    Finally, most low income families will be affected. Most rent and will not be exempted from a property tax increase as the property owner will not qualify and will pass the cost along in the form of their rent. Also, young/starting families (and fixed income folks) will also, likely, not qualify for such deferments and be further burdened.

  5. Heh…you want to cut the debate down to size by pulling vouchers into it? Good luck!

    Vouchers are great in a state where the education system is broken in spite of the fact that it is receiving adequate funding. They don’t work in a place where the education system excels in spite of funding shortfalls.

    Not enough people will take vouchers in Utah and they’ll cost taxpayers more money that could have been used for better roads, better schools or better tax cuts.

    Anyway…thanks for responding to me in your comments very cool of you. Good luck.

  6. Pingback: Davis County Tax Meeting « Utah Rattler

  7. Pingback: UTA Has It’s Way With Davis (tax increase) « Utah Rattler

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