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originally published in the Moscow-Pullman Daily News October 28-29, 2006
By Judith L. Brown
There’s a lot at stake here in Idaho on Nov. 7, Election Day. In addition to voting for various elected officials, this year’s ballot includes two propositions, three joint resolutions and an advisory vote. I’m worried that people are not sufficiently aware of all that is riding on this election.
In particular, Proposition 1 and the advisory vote both have to do with funding for public schools in Idaho. Numerous people have expressed to me their confusion about the differences between Proposition 1 and the advisory vote; and about whether it could make sense to vote “Yes” on Prop. 1 but “No” on the advisory vote, “Yes” on both of them and so on. Today I’m going to try to clarify the difference between Prop. 1 and the advisory vote.
First off, I want to be up front about the fact that I work for an organization, United Vision for Idaho, that has formally endorsed Prop. 1. We have no formal organizational position regarding the property tax/sales tax swap (the topic of the advisory vote), although we have worked actively in opposition to this idea. Both of these positions have been based in large part on research and analysis that I have conducted.
Prop. 1 would dedicate an additional $220 million (approximately) to the funding of public education in Idaho annually, and guarantee that this amount grow over time so that it keeps pace with inflation and with increasing public school enrollments. That $220 million is the amount of revenue that would result if the sales tax rate were to be raised one penny. However, Prop. 1 would not raise the sales tax rate to 7 cents. Instead, it requires the Legislature to develop a revenue stream that would generate the equivalent amount of money. Most likely, the sales tax would be modernized by broadening the base to include services.
The advisory vote is worded as follows: “Should the State of Idaho keep the property tax relief adopted in August 2006, reducing property taxes by approximately $260 million and protecting funding for public schools by keeping the sales tax at 6percent?” Basically, in language that is so flawed as to be deceptive, the advisory vote asks if voters approve or disapprove of the actions taken by the legislature at the August 25 special session. On that day, the property tax levy for the maintenance and operations of public schools was repealed, reducing revenues by approximately $260 million; and the sales tax rate was increased from 5 cents to 6 cents, increasing revenues by approximately $220 million. The net result was a tax cut of approximately $40 million. (However, as I have written previously, this $40 million net tax cut actually breaks down into a $60 million tax cut for businesses and a $20 million tax increase for families.)
One critical difference between Prop. 1 and the advisory vote, and the thing most people seem to be confused about, concerns what is sometimes called “new money” for funding public education. New money is money above and beyond what would otherwise have been appropriated.
Prop. 1 increases funding for public schools by $220 million, and requires that this enhanced funding level be maintained in future years. This is all new money.
In contrast, the advisory vote involves no new money for public schools. It merely replaces property tax revenues for public schools with sales tax revenues, leaving total funding for public schools the same — at least for this year. It provides no guarantees — no “protection” — for funding for pubic schools in future years.
In the nutshell, then, Prop. 1 increases funding for public schools whereas the advisory vote changes the mix of funding sources for public schools, replacing property tax revenues with sales tax revenues.
If you think public education in Idaho is underfunded — and here the evidence seems pretty incontrovertible to me — then vote “yes” on Prop. 1.
If you would rather pay sales tax than property tax, even if overall you end up paying more in taxes, then vote “yes” on the advisory vote.
If you think there is a better, fairer way to reform property taxes than by repealing the maintenance and operations levy for funding public schools, then vote “no” on the advisory vote.
It makes perfect sense to vote “yes” on Prop. 1 and either “yes” or “no” on the advisory vote.
* Judith L. Brown is an economist and director of the Idaho Center on Budget and Tax Policy. She lives in Moscow with her family and can be reached at jlbrown@turbonet.com.
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