Thursday, April 29, 2010
Current Events / Politics School Cuts: the problem isn't property taxes
Posted by Austin Considine on Thu, Apr 29, 2010 at 3:28 PM
- Image by the U.S. Census Bureau, via Wikimedia Commons
- "Sorry, little Tommy, but Mrs. Jones has to leave you to start bagging groceries."
Following recent news that drops in property tax revenues may lead to the shuttering of six public libraries in Indianapolis, School Board President Michael Brown says it's property tax shortfalls that are eviscerating our schools as well.
Unfortunately, Mr. Brown in misinformed.
The Indianapolis Public Schools (IPS) board unanimously approved $26.8 million in cuts to the 2010 budget Tuesday night. The cuts amount to 4.5 percent of IPS operating budget.
As reported yesterday, by WIBC, Brown says the culprit is familiar:
Michael Brown tells the 93 WIBC Indy Morning News all one needs to do is look at property tax collections."I know that property tax collections have not been at the 100-percent level, so there are probably more cuts that are coming in the future," Brown said.
But the revenue shortfalls expected for 2011 (which require IPS to make cuts ahead of time, for the 2010-2011 school year) actually have nothing to do with property taxes at this point, because IPS hasn’t received “new” property tax money since 2008.
Which means one of two things is happening: Either Brown is defaulting to an easy and familiar scapegoat, or he has no idea what’s going on with his own budget. Neither prospect is particularly encouraging.
A closer look at the 2010 IPS budget tells a different story. Through 2008, IPS did, in fact, fill roughly 20 percent of its General Fund with property tax revenues. (The general fund is IPS’ main operating fund, which pays for salaries, benefits, supplies, maintenance and the like, and accounts for over half the entire budget.)
But the 2008 property tax cuts changed the equation.
Starting Jan. 1, 2009, IPS received no new property tax money for its general fund. In order to ensure that the property tax cut didn’t affect schools, the state agreed to cough up funds to bridge the difference.
As was explained to me by an IPS budget supervisor yesterday, a surplus of property tax funds left over from 2008, to the tune of roughly $36 million, was rolled over into 2009 — money that had not necessarily been accounted for when the 2009 budget was first written up. Hence, in 2009, the IPS general fund actually saw an overall increase of over $43 million.
But much of that money went to an extra round of payroll disbursements at the end of last year and, presumably, to fill emergency coffers, in anticipation of the kinds of operating deficits we’ve seen every year since at least 2004.
By this year, property tax cash from 2008 was gone and operating funds were back down to just above 2008 levels. Another small property tax rollover of $6 million, known as an “excess levy” was included in the 2010 budget, which probably helped save IPS from having to make cuts sooner.
But a troubling trend began this year: state revenues, those funds that were supposed to make up for the property tax cuts, starting shrinking. Though state sources represent a full 95.5 percent of the general fund this year, state contributions dropped by about $8 million.
The IPS budget office says those state funds are expected to shrink by an additional $12 million next year.
This is complex stuff. But if your eyes haven’t glazed over yet, the important thing to know is that IPS’ projected budget shortfall — the one school board members decided necessitated a $27 million cut — has nothing to do with property taxes at this point. It has to do with the state not holding up its end of the bargain — a bargain that was ostensibly settled back in 2008, when property tax cuts were made.
The state gets most of its revenues from sales tax. Unsurprisingly, in a bad economy, purchasing goes down, and so does state revenue.
But as we’re currently witnessing at the center of the library cuts debate, the state and city seem to find ways to pay for sports whenever big owners like the Simons do enough arm twisting. The argument has been made — and it’s a valid one — that if the city can find $15 million for Conseco Fieldhouse, it can find a couple mill to save city libraries. It doesn’t matter what funds the monies are coming from. If libraries were a priority, the city would find the money.
How much more so for city schools?
Brown was right when said to WIBC that "when you're talking about cutting 4.5 percent, you're talking about actual people and lives." But assign blame where it’s due. Property taxes have almost nothing to do with schools today.
Marion county had no problem raising restaurant sales taxes to pay for Lucas Oil Stadium. But now a sales tax shortfall is choking our schools. What, exactly, are we telling our children these days about our priorities?
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