It was just a little more than 25 years ago, on March 15, 1994, that Michigan voters overwhelmingly approved Proposal A, one of the most iconic and game-changing tax shifts in the state’s history of funding public schools.
In assessing the impact, it is more than likely Proposal A indeed was good policy in some ways, but not so much in others.
The essential part of the proposal was cutting local property taxes for funding local school districts down to six mills. To make up the difference, there was to be a 50 percent increase in the state sales tax, from four to six cents on the dollar.
There were other provisions, such as the 5% cap on property tax increases annually and hikes in sin taxes, such as on cigarettes.
Perhaps the most positive effect was closing the gap in funding between “poor” districts, which weren’t blessed with a lot of industry or business, or a solid tax base, which were enjoyed by other districts. It was said that in 1993 the poorest schools were getting less than $3,000 per pupil while the rich ones were taking in about $11,000 per student.
Much of the funding gap indeed has been closed, as the rich are doing fine and the poor’s lots have improved.
Some would argue another positive effect was homeowners not getting tax annual notices showing serious increases in assessments, at least not beyond 5%.
But I recall Barry County Equalization Director Karen Scarborough writing a letter to the editor at the Hastings Banner, explaining the potential pitfalls of artificially limiting tax assessments. A lone voice in the wilderness, she maintained that the real values of properties eventually would catch up at certain times it would be unexpected.
Sure enough, about a dozen years later, when property and housing values were declining with a recession, property owners filled township halls and local places of gathering to protest assessments that were above property values, something I insisted was the Revenge of Proposal A.
Then-State Rep. Brian Calley took issue with my assessment of the unpleasant development, insisting it was because of a ruling by then-Attorney General Frank Kelley, with the key word “shall” rather than “may.”
But the provision that really separated the winners and losers was the combination of the property tax cut and increase in the sales tax.
People who could not afford to own homes or property did not receive a tax cut. It was the renters who were socked with a 50% sales tax increase that affected everybody. But because they were not affluent enough to buy or own property, all they got was that increase.
And when I asked apartment complex owners and other landlords if they lowered the rent payments on their dwelling, the response was something akin to “in your dreams.”
Another negative effect of Proposal A was that local school boards have lost a lot of their power and importance. The only millage elections they can have now is for buildings and improvements. The state now controls most of the purse strings for schools.
So you might say the state has taken control of most public schools, and with the advent of charter schools and growingly successful efforts in spending public tax dollars on private religious education, the public schools continually face increasingly daunting challenges.
As Couchman so often signs off with… “And so it goes.”
