Changes In School Funding

The House will debate, this coming year, a proposal to replace funding of education via property tax with a three percent sales tax. The Telegraph has a look. The teachers unions are opposed, which makes me think it might be a good idea.

21 comments

  1. memberg says:

    What about old people who are already exempt from school taxes but spend lots of money on prescription drugs? Should they have to pay 3% more for their medicine and everything else to pay a tax they for good reason aren’t paying now?

  2. Tater Tate says:

    And why should one million property owners in Georgia foot the bill for k-12 education? A sales tax makes perfect sense as it spreads it out amoung all consumers. The more you spend, the more you pay. And it has the advantage of putting some of the burden on those who travel through our state, but do not live here. Great plan. I hope they will do it asap.

    We all have a vested interest in good public education in Georgia. This levels the playing field for poor counties as the monies are distributed on the basis of number of pupils, or some such formula.

  3. I pay rent to Post Properties, and what do you know I checked their annual report on their website and they pay a substantial chunk of property taxes. The idea that only “homeowners” pay property taxes is bunk. It’s passed through to renters as part of the rent, the same way conservatives LOVE to tell us all the time that corporations don’t really pay corporate taxes because they pass that on as a cost to their customers.

    The fact of education, specifically in diverse counties like Cobb or DeKalb or even Glynn, is that the schools are nicer in the nicer communities where they pay more property taxes. As unfair as some may argue this is, at least the nicer communities are paying more taxes, and so you can justify it that way. But what happens if we switch to a sales tax? The nicer communities, who have more clout, are still going to get more school funding, but they’ll no longer be paying for it directly.

    That’s just one issue. But like most Republican tax overhauls (see the fair tax for example) I suspect that this sales tax is just a way to increase the average tax burden for poor Georgians while giving rich homeowners in east Cobb a huge tax break. And not just that, but I guarantee it won’t change anything. The underperforming schools will still underperform, the good public schools in this state will still be unattainable for most kids because their parents can’t afford to live close to them.

  4. landman says:

    CHRIS,You democrats never cease to amaze me with your logic on tax issues.Consumption taxes are a great solution and spread the tax responsibilities to everyone.Doesnt it stand to reason that these “RICH” people you talk about will spend more money in the acquisition of goods and services and thus once again take care of their portion of the tax burden?

  5. Landman, I actually have the perfect response to your argument. If everything just evened out and the rich were still paying about the same and the poor were too, what would be the point of changing the collection method?

    In other words, if me and my parents and my friends and everyone in Georgia will be paying the same amount of $$ in taxes no matter the system, what do I care if the system is property taxes or sales taxes?

    Obviously, you don’t try to change the tax system in order that everyone can still pay the same amount. You change it so that some will pay less and some will pay more. And because Georgia schools are underfunded as is, I imagine a sales tax will mean most will pay far more than they currently do.

    That’s fine, because Georgia’s schools need the necessary money to do their job. But why should everyone that currently doesn’t pay that much in property taxes see their tax burden go up so that people that pay a lot in property taxes now can get a big cut?

  6. landman says:

    Chris,you neglect to acknowledge a major third party in a sales tax format and that is tourist\travelers.I dont think anyone believes we will see a big tax cut but rather a more equitable tax structure that will allow everyone to share the burden.

  7. Bill Simon says:

    Chrisis: So many questions, so many answers…

    1) “what do I care if the system is property taxes or sales taxes?”
    Answer: Because with sales taxes, we get to choose HOW we generate the taxes by choosing what to buy and when to buy it. With property taxes, I cut a big check to Cobb County for $1400 all at once with no direct benefit to my life for a large chunk of that. I don’t have kids, but I got to pay for other people’s decisions to have rug-rat-brats by paying for their education. Sales taxes spread the unfair burden of those of us who have to support other people’s education to more people. That is how you define “fairness.”

    2) “why should everyone that currently doesn’t pay that much in property taxes see their tax burden go up so that people that pay a lot in property taxes now can get a big cut?” Answer: Again, where is it written that those paying large chunks of money on taxes deserve to continue to pay large chunks of money on taxes?

    Again, it’s called “fairness”, Chris. You talk about “poor people”, well, I didn’t have a hand in the “poor people” deciding to have kids that they couldn’t afford to raise by themselves, so why should I have to pay for them? Answer me on that, Chris.

  8. Rebel says:

    One of the big factors that inclines me toward this idea is actually getting some revenue from the huge underground economy. It’s not just all drug dealers either. Have any of you ever paid cash for lawn work, or plumbing, or electrical, etc. Do you really think they reported that?

    And how do people with no obvious means of support (ie no jobs – just welfare) manage to afford sound systems and rims for their cars – nice cars too?

    There is no way to tell how big the underground economy is. The only thing we know for sure – those with money, spend money.

  9. Rebel practically every study of sales tax increases shows that more, not less transactions are pushed into the black market when you shift from income or property taxes to sales taxes.

    Bill, you pay a lot of taxes to live in Cobb county in a nice school district? Living in the nice school district has probably also increased the property of your house. If you don’t like living in an expensive house because of the higher property taxes, move to Paulding or Smyrna. But if you live in the Walton or Pope school district the higher amount that you pay to live near those schools has also increased your property value at a higher rate than those that live in less desirable areas.

    Although I do not advocate this, it seems the fairest way to change the system so that Bill Simon doesn’t have to pay to educate kids that aren’t his own would be to only levy property taxes on people with school age children. If you “choose” to buy a TV and you don’t have kids, you’ll still be paying for someone else’s education.

  10. Bull Moose says:

    Our economic system is not set up to sustain a sales tax as large as that which would be the result of the current system, plus the three percent for education, plus the current SPLOST’S AND ESPLOST’S that exist.

    For some communities, that would mean a sales tax rate of 10%. Yes, there is an offset of savings on property taxes, but our total economic system is not ready.

    We need to explore ideas, but this Constitutional Amendment is a bad idea and bad timing.

    The hearings have not even concluded and already there is an Amendment being proposed. Why even bother having any hearings around the state.

  11. Erick says:

    Bull Moose and Chris, I do see your points, but they how to do we get those who do not pay property taxes but send their kids to public school to pay into the system? We exempt the elderly from property taxes for education. Those who live in government housing don’t pay. It’s just the rest of us, whether we send kids to schools or not.

    Likewise, if we’re suppose to give every child the opportunity for an equal education, isn’t it somewhat more equitable to fund education through sales taxes that are spread across the state, as opposed to rural counties having less money and being more dependent on state and federal assistance than high income areas of urban counties?

    Just asking.

  12. kspencer says:

    I’ve three concerns regarding the use of sales taxes that I would hope would be answered before a decision is made.

    The first two are interrelated – it’d be almost fairest to consider them one concern. These are the concerns of local control and distribution of funds. I know right now that collections per student vary between school districts – mostly based on what the local residents and school boards have agreed upon as a compromise between what the children need and what the residents are willing to pay. If all the money (save possibly SPLOSTS and other local sales tax supplements) is distributed from the state, that control is gone.

    This becomes particularly significant when determining how much money per student should be provided. Is it going to be equal to the highest percapita expenditures, or some lesser level? And if the latter, isn’t that disruptive to our desire for outstanding education – which those local residents have indicated as being willing to pay for?

    Third (or second, depending on how you’re counting) concern is the inevitable variability of income. Property taxes give a school a fairly solid basis for planning next year’s budget. Schools which have to rely solely on sales taxes risk significantly high and unanticipated cuts. I am particularly concerned by the likelihood of reduced tourism dollars as gas prices climb ever higher. It bothers me that the one time I listened to a serious discussion on this, the proponent used “good time” income for potential income and was unprepared to show what would have been available for schools during any depression period.

    A mixed concern – pros and cons – relates to the first point of dollars tracking students. Are these dollars going to be allowed to follow students to private schools? What about home schools? And for both, what measures to prevent fraud are envisioned. FWIW, I’m far less bothered by homeschool than by private schools. I despise subsidizing businesses with my taxes – businesses that have as a core objective making a profit. The whole school voucher argument (in ALL its aspects, good and bad) is obviously applicable here.

  13. Rebel says:

    I despise subsidizing failure with my tax dollars!

    And for those that think the current system ain’t broke, why are over 50 school systems suing the state concerning the allocation of funds?

  14. kspencer says:

    Rebel, I’m confused. The systems get some money from the state and some from local. The systems to whom you refer are saying the state has screwed up their share of the funding.

    So you are saying the solution is to take funding power away from the group that’s not doing it right and give all the funding to the group that’s screwing up the distribution? Reward the incompetent?

    I’m sorry, that makes no sense to me. Instead it makes me more hesitant to support the shift in funding.

  15. kspencer says:

    Man, I really need to better doublecheck before posting. In prior, please read “away from the group that’s not doing it right” as “take funding power away from the group that IS doing it right”.

    Thanks

  16. Rebel says:

    As I understand it, they believe they aren’t getting enough to adequately fund education in their area. It is currently based upon a per pupil allocation, but they argue that because they have a small number of pupils that the formula shortchanges them.

    The concern is that instead of the “kids on the richer side of town” getting a better education, the “kids in the richer area of the state” are getting a better education because they have more dollars to use.

    No matter how we take in the money (property, sales, etc) the amount allocated and the allocation method is a point of contention.

    One argument in favor of a sales tax is that while you may live in a rural or poor area, when you go shopping you head to a urban or richer area and head to the mall. Then your dollars are hard a work educating the kids of Atlanta. Same applies when cars are purchased, fine dining, etc. If the area you live in doesn’t have those options, you have to go elsewhere. A sales tax allows all dollars to be divided equally. But then we get back to the question of what “equal” is.

  17. kspencer says:

    Rebel, true – and I apologize for the bit of snark.

    As a bit of deeper information, the current distribution is a modified per-kid rate. As it happens, the modification is that poorer counties get higher per-kid rates. The 50 counties are claiming that the higher rates aren’t ENOUGH higher – they want more money out of the state’s share. FWIW, the state currently funds approximately 60% of the total of what schools receive, excluding federal grants schools and systems may have earned. It’s an ugly nut because SOMEONE is going to get shorted in some way.

    That, by the way, is why I have the concerns I do. To reiterate:
    – What will be the basis of distribution?
    – What rate is going to be used as a baseline – that is, will the effect be to fund the state at the current ‘wealthy county’ rates, or will it be to depress the education level of those to some median level?
    – Will the distributions follow students to non-public schools and educational programs?
    – Will there be a floor for disbursements for schools to prepare for the economic bad times?

    The answers will be controversial, but unwillingness to confront them doesn’t make them go away but rather just makes participants unwilling to accept the change. (Something about buying a pig in a poke, or signing the contract without reading it. I think you understand.)

  18. Rebel says:

    What we need are less counties. 159 counties are too many for 2005 – it may have been necessary in 1894, but not now. And, at the same time, less school districts. Then savings will come about because of less administrative costs and the economy of scale.

    But you won’t get a lot of interest in that b/c of perceived loss of power by some folks and the actual loss of jobs/power by others.

  19. kspencer says:

    I’ve been pondering this one recently, thought I’d share a thought or two.

    In general, the elderly voter will be against this. In simple, it means they pay more than they did. (Recall that their property taxes already get an exemption. A cut in property taxes is likely to cut against the exemption, not what’s left to pay. Proponents of the measure wanting that segment should look for ways to reduce the portion the elderly pay – ways that’ll stick.)

    In general, non-elderly property owners will be for this. Pretty obvious, it implies their taxes will go down (overall). Opponents of the measure should be pointing out that it’s removing schools from the funding, not cutting the tax burden. Not a darn thing so far prevents municipalities from keeping the money and distributing the schools’ share among other segments – fire, police, libraries, parks & rec, and commissioner salaries. Adjunct note – property owners include businesses that own property.

    In general, renters will be against it. Pretty obvious, of course, that they’re going to pay more tax. Unless the proponents can guarantee not only that property taxes will come down but that the businesses from whom they’re leasing/renting will pass on those tax cuts instead of increasing their profits, that’s unlikely to change.

    School staff (admin, boards and teachers) will be in a “it depends” situation. If they’re given assurances it’ll end up as more, and safeguards against significant problems in troubled times, they’re actually likely to approve it in the end. Otherwise it’s going to be disliked in general. Worth noting on several levels are the concerns of how money follows students – if it follows them to homeschools and private schools (and across district borders), and how easily does it do so. That’s still “money lost” in the eyes of the school staff.

    Using the US Census data (estimates), if you start with the owner/renter split (60/40 percent in Georgia), and move over-60 owners from own to rent, you get real close to a 50/50 split. Which means in the end it depends on the details of the plan and how they’re sold that’ll determine whether it passes or fails at the polls. I say the polls, because I’m pretty well convinced it’ll pass the legislature.

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