Property tax restructuring inevitable to comply with McCleary decision

robsupremecourtUnlike my friend Rob McKenna, I did not attend law school.   I am in no way qualified to write a legal brief or argue before the Supreme Court, as he has done.

But the great thing about our federal and state constitutions is the fact that they are written in plain English, as are (usually) the decisions rendered by our federal and state Supreme Courts.  Usually, any citizen who will take the time can read and understand the court decisions that shape public policy.  That is certainly true of last year’s McCleary decision regarding public education funding which is now driving most decisions made about the state budget.

When you simply read the decision – and apply some common sense – the issues are clear, and so is the fact that Rob McKenna was right during the 2012 gubernatorial campaign:  property tax restructuring – the so-called “levy swap” – is inevitable to comply with the state court’s McCleary decision.

Let’s look at the major issues in the case, and what the Supremes said, in their own words:

The Paramount duty of the state is to provide “ample” support for basic education:

Article IX, section 1 confers on children in Washington a positive constitutional right to an amply funded education. (page 2)

The State is not meeting its paramount duty:

We affirm the trial court’s declaratory ruling and hold that the State has not complied with its Article IX, section 1 duty to make ample provision for the education of all children in Washington.  (page 69)

Ample means more than just adequate:

The word “ample” in Article IX, section 1 provides a broad constitutional guideline meaning fully, sufficient, and considerably more than just adequate. (page 3)

At a minimum, the State must fully fund overhead costs, transportation, and staff salaries and benefits:

If the State’s funding formulas provide only a portion of what it actually costs a school to pay its teachers, get kids to school, and keep the lights on, then the legislature cannot maintain that it is fully funding basic education through its funding formulas. (page 60)

Beyond these minimum requirements, “Basic education” means whatever is necessary to give students the opportunity to meet the education goals set by the state:

The “education” required under Article IX, section 1 consists of the opportunity to obtain the knowledge and skills described in Seattle School District, ESHB 1209, and the Essential Academic Learning Requirements.

The legislature passed a bill in 2009 providing a new definition of basic education.  Now it has to be funded:

The legislature recently enacted a promising reform package under ESHB 2261, 61st Leg., Reg. Sess. (Wash. 2009), which if fully funded, will remedy deficiencies in the public K-12 funding system. (page 3)

School districts are currently using levy dollars for up to 28% of their spending.  Relying on local levies or federal funding is unconstitutional because it is unstable and unfair:

The fact that local levy funds have been at least in part supporting the basic education program is inescapable…..Reliance on levy funding to finance basic education was unconstitutional 30 years ago….and it is unconstitutional now. (page 68)

Similarly, we find it difficult to characterize federal funding of certain education programs as a “regular and dependable tax source [],” id. at 523, for purposes of satisfying the State’s obligation. (page 56)

And by the way, lack of revenue does not justify failing to meet the paramount duty:

To ensure that the legislature exercises its authority within constitutionally prescribed bounds, any reduction of programs or offerings from the basic education program must be accompanied by an educational policy rationale. That is, the legislature may not eliminate an offering from the basic education program for reasons unrelated to educational policy, such as fiscal crisis or mere expediency.  (page 54)

So the state has to pay for virtually everything happening in our schools today, plus fund the enhancements the legislature has committed to:  implementing full-day Kindergarten for all districts, plus hiring more teachers, more counselors, and more paraeducators – and paying them more money.  And they have to do this without the use of local levies.

The cost for all this?  An estimated five to seven billion dollars more than we are spending now.

Given the de facto control of the Senate by Republicans, the legislature is not going be raising taxes.  (Good!)  So where will the money come from?  Some of it is going to have to come from property tax restructuring.

Once upon a time, levies were only used for enhancements and were capped at 10% of a school district’s budget.  Over time levies have crept ever higher and have been used to fund anything and everything in education, including salaries, transportation, and overhead; exactly what the Court just found unconstitutional.  Unless the Supreme Court backs down, school districts are going to be compelled to stop using levy dollars for basic ed.

So now we have the following choices regarding property taxes:

  1. Keep levies really high and spend the money on super cool band uniforms
  2. Reduce levies and give property owners a big tax cut while the state is under court order to spend billions more on education
  3. Reduce local property tax levies while raising the state property tax by an equal amount and use the “new” state money to fund basic ed.  This proposal is what’s known as the “levy swap”.

The levy swap will provide roughly $2 billion to the state’s coffers for basic education without raising taxes.  Add in the expected new revenue from economic growth and now you are in the ballpark to fully fund basic education by the court-imposed deadline of 2018.

The logic behind the swap is so overwhelming it is one of the only things Democratic Rep. Ross Hunter and Republican Senator Joe Zarelli, House and Senate leaders on the budget in 2012, ever agreed on.  State Superintendent Randy Dorn supports some form of the swap.  And Rob McKenna made the levy swap a part of his plan to fully fund basic education.

Unfortunately, Jay Inslee opposed the levy swap during the campaign and – along with the special interest groups advertising on his behalf – attacked McKenna’s position while providing no details on how he would fund the requirements of the McCleary decision.  As of today there is still no specific plan in place regarding how we reach full funding by 2018.

The legislature took baby steps this year towards complying with the McCleary decision.  Now it’s time to get serious and adopt a real plan that includes restructuring of property taxes.  The levy swap isn’t just smarter government; it’s inevitable.  Let’s get on with it.

— Chris Vance

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Chris Vance

Chris Vance

Former State Representative, County Councilman, and GOP State Chairman. Now working as a Public Affairs Consultant, Senior Advisor to SPI Randy Dorn, and Political Commentator on KING and KCTS TV and