Why uproar over school fund balances?
Call me naive, but I really do not understand the uproar over school taxes. I mean, obviously no one likes taxes, I get that. But I think we need to take a few deep breaths here.
It is a given that our current system of funding schools has led to some wild disparities between how much school districts can spend on education. It only takes a modest understanding of economics to see how spending more on education enables one district to attract better talent, provide better facilities, and then achieve better results. This, in turn, attracts more wealth to a district, driving real estate prices up, raising the tax base, and creating a spiraling cycle of inequality.
We definitely need to reform how we fund education in our state if we want to provide the same educational opportunities to every Pennsylvanian. I firmly believe in that goal, and the Commonwealth Court just ruled that the current funding system violates the state and U.S. constitutions and needs to be overhauled.
But that’s not even what the recent controversy was about.
When the Auditor General released a report saying that 12 Pennsylvania school districts had played a “shell game” to raise taxes, he skillfully framed it in sensationalized statistical fashion. While admitting that everything the 12 districts did was completely in accordance with the law, he said that they, “collectively (raised) taxes 37 times during the four years we reviewed.”
This sounds shocking, until you translate it: on average, each district raised taxes once per year.
I checked, and inflation also went up every year during that period. Here in West Chester, the budget increased 10.7% over the audit period while inflation rose 7.2%. There is a discrepancy there of over $8 million, but it is probably worth noting that during that same time, the district built a new $23 million elementary school and then hired the faculty and staff to run it. The school was built not as a showpiece or to replace an aging building, it was built to keep up with the break-neck pace of residential development in the district.
Having extra money in the General Fund enables the district to secure better bond rates. That means lower borrowing costs for projects, which means that the taxpayers save money on interest.
The eye-catching way the AG presented his audit was tailormade to gin up angst against school districts at a time when the Very Loud People have been warning us about Marxism, the dangers of teaching white children about racism, and the scary books about gay people in the library. The AG handed the VLP one more arrow in their defund-the-schools crusade, and it is just as vacuous as all the others.
This has led some to conclude we should end property taxes, invoking the unrelated argument that the burden on low- and fixed-income property owners is too high. But property taxes are based on property value. People fortunate enough to buy property get to decide how much property tax they will pay when they decide what real estate to buy. Not to mention that most property owners take the mortgage interest deduction, effectively a decades-long public subsidy for those wealthy enough to own property.
Moreover, eliminating property taxes does not magically reduce any costs. We just have to find a different way to collect the same amount of money. This means an increase in either sales tax or income tax. Or both.
Our flat-rate state income tax and sales tax are both regressive, they disproportionately hurt low- and fixed-income residents (whether they own real estate or not). Therefore, if we eliminate property taxes to relieve the burden on low- and fixed-income Pennsylvanians, and replace it with higher sales and income taxes intended to raise the same amount of money, we will end up hurting some of the very people we set out to protect.
Listen, something fishy might have been going on in some of the 12 districts, but property taxes were not the problem. With the Commonwealth Court’s recent ruling, we have the opportunity to find a better way to distribute educational funding, some of which should still come from property taxes.