Michigan public schools could seek regional taxes

(Detroit Free Press)- Michigan public schools in financial straits and failing to make headway in their efforts to wring more revenue out of Lansing could consider this idea: asking local voters to approve a school operating millage.

Although seldom sought since voters approved the statewide school funding overhaul called Proposal A in 1994, public schools can legally seek more money from local property owners if they do so collectively. The limit they can ask for is 3 mills ($1 for every $1,000 of taxable property value), levied across an intermediate or regional school district. In most instances, that means countywide.

The reason that few so-called enhancement-millage elections have been held since '94 is that getting countywide approval for a tax hike is difficult. Schools would share the revenue raised based on how many students their schools have.

Ron Fuller, superintendent of the Kalamazoo Regional Educational Service Agency, said schools won't know if voters might go along unless they ask. He represents one of the very few areas to win an enhancement-millage election in 2005.

"The answer is always no if you don't ask," he said.

Multi-district tax a tough sell, but that could change

With state aid in peril and federal stimulus funding that came to the rescue this year set to expire, is it time for Michigan's local school districts to turn again to local taxpayers?

Some have exercised a rarely used option under 1994's Proposal A to seek multi-district millage hikes.

Very few have succeeded.

The schools of Washtenaw County -- including Ann Arbor, Ypsilanti and Saline -- asked voters to approve enhancement mills on Nov. 3. Property taxpayers in the Washtenaw Intermediate School District would have paid an extra 2 mills for 5 years had the request been approved.

It passed in Ann Arbor, but got hammered elsewhere. The final tally was 57.4% no to 42.6% yes.

"We knew that this was a bad time" to be asking taxpayers for more money, said Ann Arbor Public Schools communications director Liz Margolis. "But we just had no choice."

With state help in decline as state revenues shrink and the likelihood of more bad news to come, a countywide discussion had been under way for a year, Margolis said. Ann Arbor voters had a history of support for school millages, and district officials led the campaign.

But while Ann Arbor voters kept their reputation intact, the measure lost by margins of up to 3-1 in some out-county communities such as Milan and Lodi Township. Margolis said schools won't try again soon and would give it another shot only if every school district in the intermediate school district, or ISD, would "buy in and really try to sell it."

So far, talk about enhancement-millage requests -- regions can ask for as much as 3 mills and use the money for any purpose -- has been muted around the state.

David Martell, executive director of the Michigan School Business Officials, said that for years after Proposal A took effect, school funding was secure and obstacles to winning regional approval for tax hikes were so high, that few enhancement elections were held.

"It's a very, very hard sell," Martell said, chiefly because the cost and benefits are usually unbalanced across an ISD because the tax is assessed on property wealth and distributed on a per-pupil basis.

But financial conditions are rapidly worsening in so many districts that Martell said the bar for passing a millage could drop.

"I don't know why" enhancement-millage requests "haven't taken hold more recently," he said. "I think once parents start to feel the real impact of the cuts that are coming ... they might turn to something like that."

Voters in Kalamazoo County approved a 1.5-mill regional tax in 2005 and renewed it by a wider margin in 2008. But Kalamazoo Regional Superintendent Ron Fuller said that unless economic anxiety in Michigan lightens by then, "it will be a tougher sell a year and a half from now" when it is scheduled to expire again.

Doug Drake, a financial analyst with Public Policy Associates in Lansing and former state budget official, said that if state lawmakers decline to approve higher taxes to restore school funding, more districts may have to consider joining for enhancement efforts.

"When the checkbook in the sky is empty, you just may have to think about going door-to-door. There aren't very many other options," Drake said.

Related content
Where schools get their money

State aid: This is, by far, the largest source of school cash, accounting for more than 70% of a typical school budget. It's shrinking because the revenues upon which it depends -- mostly the state education property tax and earmarked sales taxes -- have declined.

State lottery revenues: All profits go for schools, but they're down, too.

Local property taxes: School districts raise some money from local taxpayers (especially for building or other capital projects), but the real estate crash is eroding tax collections, too -- though not as fast as it eroded property values.

Federal help: Government payments for local schools have been growing in recent years. The federal stimulus funds earmarked for K-12 schools in 2009-10, about $1 billion, have been crucial. They're mostly gone at the end of the current school year.

By Dawson Bell, Detroit Free Press Staff Writer