Education Reform, Property Taxes, and What the Post-Dispatch Got Totally Wrong
There has been a great deal of discussion about property taxes in the wake of the state Supreme Court’s decision in favor of taxpayers the other day. In particular, Judge Michael Wolff’s partial dissent has encouraged a nice debate. I want to focus here on a few key questions about property taxes, and correct a few errors that have cropped up in discussions. I will try to do this concisely, because this could easily grow into a 3,000-word essay.
Judge Wolff and the Post-Dispatch argue that property taxation is not a fair way to fund schools, because obviously the wealthier areas get more property taxes. The justice writes (quote via a Beacon article):
These unequal results pose a simple question that is hard to avoid and even harder to answer: What makes the children of one school district deserving of only about one-third of the education money available for the schools of the children in the highest-spending district?
Because the state constitution seems to authorize this absurdly unequal structure, the question is one of policy, not law.
The gross disparities created or tolerated in the system, however, ought to make courts especially attentive to particular constitutional requirements such as taxation of property tax wealth.
I disagree. The property tax is a fair way to fund schools, provided that the funds are supplemented by other taxes (currently state income taxes) to address a portion of the disparities that result. Judge Wolff clearly understands that property taxes are actually more equal than the other primary methods of taxation, as he writes in a footnote:
If one is disturbed by the inequalities of property taxes, one simply should imagine local taxation based, instead, on local incomes or on local retail sales. Property wealth, it seems to me, is far more evenly distributed throughout the state than income or retail sales even though the property tax wealth per pupil of the wealthiest districts is 15 to 20 times that of poor districts.
He is absolutely right here. The differences between sales tax collection in certain areas can dramatically large, as there are some school districts in the state that have little to no retail sales, while a district like Brentwood would be awash in sales tax dollars. The income taxation levels between Ladue school district and Hancock Place would also be enormous.
The fact is that part of the blame, for lack of a better term, for low funding levels in many school districts (especially in rural areas) lies with taxpayers who elect assessors that will keep official property values low, and then vote to keep taxes low on top of that. It’s fine with me if they do that — they may, or may not, be hurting their own children and communities. Some of that disparity is offset by income taxes that are paid statewide, but I don’t think general taxes should be raised to pay for eduction in areas where the local citizens have chosen to keep school funding low.
Property-rich counties quickly become freeloaders when they employ assessment methods that dilute the market value of their real estate. They deprive poor counties who play by the rules and pay their fair share.
The author of this editorial clearly has no idea how assessments work in Missouri. It is the property-rich counties, like St. Louis, Jackson, and St. Charles, that use appointed assessors and value their property more aggressively close to market values. It is the poorer, more rural counties that use elected assessors and lack “certificates of value,” thereby undervaluing their property, keeping their school funding low, and receiving increased state aid because of that.
The wealthier school districts in St. Louis County — and presumably Jackson, too — have not seen any increases in state aid for years, precisely because they support their school locally with more accurate assessments and higher voter-approved taxing levels. The poor counties tend to take advantage of the system as “freeloaders,” not the rich counties. (It is possible that the Post has a different set of counties in mind as being “rich,” in which case I’ll amend my criticism. But I have to assume that their examples of wealthy counties in Missouri are the same ones everyone else would choose.)
I could go on and on, but I won’t. If we truly want to increase educational opportunities for all of Missouri’s children, it will take a lot more than adjustments to the school funding formula. For too many kids, that strategy is just rearranging deck chairs on the Lusitania (although that metaphor doesn’t quite work, because the Lusitania sank so quickly that its passengers didn’t really have time to engage in any ironic comedy before dying).