The T Word: Some Senate DFLers favor ed spending approach that would push about $1 billion onto property taxes

[Note: This story originally appeared in the 2/20 issue of the PIM Weekly Newsletter.]

In the Minnesota House, there appears to be a lot of enthusiasm among Democrats for Rep. Mindy Greiling’s wide-ranging "new Minnesota Miracle" bill for reworking state education spending. On the Senate DFL side, it’s a different story. The Greiling plan is widely viewed there as too expensive to pass this session in view of the state’s eventual $6-$7 billion deficit. Says one prominent DFL senator: "I get the impression most education people in the Senate think she’s being unrealistic at this time, not that she’s wrong about the long-term approach."

Meanwhile, though, there’s considerable Senate support for undoing 2001 Ventura administration reforms that saw the state take on a greater share of education funding responsibilities.

Senate DFLers are likely eyeing not only the $1 billion a year or so they say the move would put back in the general fund as of FY2011, but also a related cost-shift that could raise the total restored to the general fund to the $1.5 billion range.

The other side of the coin would be significant increases in property tax levies. House and Senate analysts tell PIM on background that it’s difficult to say which kinds of districts would be hit hardest, because that would depend on the approach taken to devising a new general education levy system. The 2001 reforms were generally thought to be a boon to wealthier, mostly suburban school districts (the districts with richer property tax bases, that is). These districts hadn’t been receiving very high proportions of state aid under the pre-2001 funding formula; afterwards, they got more state money and saw the relative education funding burden on local property taxes lessened.

There are two obvious political minefields in trying to roll back the 2001 changes.

First, Minnesota’s total projected 2009 property tax receipts are in the vicinity of $7.77 billion, according to League of Minnesota Cities lead fiscal analyst Rachel Walker, though she adds that those are still preliminary numbers. And Gary Carlson, LMC’s lead lobbyist, says that shifting $1 billion in state education funding back on to property taxes would bring the total upward pressure on property levies to about $1.5 billion a year in this biennium–or approximately a 19 percent uptick. At a time when property values have been declining for over a year and are expected to continue doing so throughout 2009, this would mean fairly eye-popping rate increases.

Second, the local education levies that the state partially relieved back in 2001 didn’t stay relieved for practical purposes. Those levies have since grown dramatically, owing to a number of factors. Prominent among them: the failure of state education spending to keep pace with the real increases in education costs. In 2001, the year before the Ventura reforms kicked in, total local education levies were $1.92 billion. The next year they fell to $986 million. By 2008, they were back to $1.91 billion, and they’re projected to reach $2.27 billion by FY2011–without the additional billion dollars’ worth of liabilities that some legislators are thinking of tossing back into the laps of locals.

One Response to “The T Word: Some Senate DFLers favor ed spending approach that would push about $1 billion onto property taxes”

1. Anonymous Says:
   February 24th, 2009 at 12:18 pm

   The current method of funding K-12 public schools in Minnesota is unequitable in tax effort and in providing equal funding for all students regardless of their zip code. Minnesota should consider a funding formula based on the Iowa model that levies a uniform levy on all property of $5.40 per $1,000 assessed valuation. All the rest of the revenue is paid for by the state of Iowa. Minnesota should consider adopting a school aid formula that is BEST: Balanced, Equitable, Simplified, and Targeted for Special Education and students living in poverty. Joseph E. Brown, Sr. - Grand Meadow ISD 495 Superintendent and former Iowa State Senator 1979-2006. jbrown@gm.k12.mn.us