I was recently asked about the concept of having an income tax to fund education, presumably to replace property taxes as a primary source of revenue for schools. I have studied and worked on concepts and struggled through the political, economic and legal realities of this subject for many years, including (as the President of R.E.F.I.T.) having participated in one of the three major constitutional challenge lawsuits concerning state funding of New York schools
New York already has an income tax that funds education, along with a sales tax and a host of other use taxes and fees. Those taxes and fees generate the money that school districts receive as state aid, their second largest source of revenue.
Years ago, in the late 70's and early 80's, state aid (meaning income and other taxes) provided 40 percent-50 percent or more of school district revenue. In the intervening years, the portion of total school revenue made up by income and other taxes through state aid shrunk to a low point of about 17 percent, meaning property taxes as a percent of school funding increased from about 56 percentto as much as 83 percent of the typical school budget.
However, the percentage reduction of total school funding via state aid was not due to any overall or longitudinal reduction of state aid, but rather, was due to the inexorably increasing spending by school districts which consistently outpaced the rather reasonable growth trend of State Aid.
Five school systems in New York do not have school property taxes, per the State Constitution: Buffalo, New York, Rochester, Syracuse and Yonkers. In those big five cities, schools are funded through the city treasury, and largely through local income and sales taxes, though none of those taxes is specifically earmarked for school funding. Perhaps coincidentally, the largest concentrations of failing schools and the largest structural financial deficits among all 700 school systems in the state are within the big five cities that do not have “school taxes”.
This points directly at the major reason militating against replacing property taxes with income or sales tax as the primary method of funding education: stability of the revenue stream. Income and sales tax revenues fluctuate radically, meaning they take large, sudden, unpredictable swings. Attempting to rely upon such mercurial sources of money to fund pensions, health benefits and labor agreements for school employees would not be at all feasible, especially in the context of the Triboro Amendment.
In the same vein, New York and the metro area exist in a highly competitive market for locating businesses and jobs. Higher income and sales taxes would make New York and the metro area uncompetitive with other states, particularly neighboring New Jersey, Connecticut, and Pennsylvania for attracting and retaining businesses and jobs. The long term effect of that would be to cause the income and sales tax revenues that already fund education, here, to be further eroded.
The solution to the tax dilemma is as easy or as hard as we want to make it. Spending has to be reduced. The definition of “education spending” needs to be reworked, and the State Constitution’s definition of a “sound, basic education” should be updated and brought into line with current expectations and realities. Here are some thoughts:
- Presently, the leading edge of the Baby Boom generation is turning 66 years old, meaning they are eligible to collect full Social Security retirement benefits with no income limitations. Approximately 10,000 Boomers are retiring every day! In Wantagh and Seaford, and generally across Nassau County, 40 percent of registered voters are older than 55, and within four years, registered voters older than 55 will be in the arithmetical majority. Significantly improving the Enhanced STAR program by changing the income limitation and increasing the property tax discount level would remove much of the present and growing contentiousness over school budgets and school taxes especially from seniors.
- The Smithtown Superintendent is retiring this year. This event stirred me to compare Smithtown with Wantagh, Seaford, Plainedge and Island Trees. Each of those districts has a Superintendent and a complete cadre of administrators and other non-teaching staff. However, the enrollment in Smithtown is just about the same as the combined enrollments of Wantagh, Seaford, Plainedge and Island Trees. I see little logic to and no benefit from maintaining full staffs of non-teaching and administrative positions in little tiny school districts for the long term. While outright merging of small districts may not be practical, consolidating all non-classroom teaching functions and positions across groups of four to five school districts really is going to have to be considered in the very near future.
- Pick the low-hanging fruit! Declining enrollment from both census data and a resurgence of people sending their children to parochial schools is providing an irresistible impetus that should not be ignored. Princeton Plan arrangements, interstitial areas, and other means for optimizing the efficient use of school buildings and teaching staff could be implemented with far less hassle than outright school closings, which are also growing in popularity around the Island.
- Carpe Diem! Seize the day! Instead of perpetually moaning about unfunded mandates, when the Regents un-mandates something that is unfunded, then take advantage of that. I refer to the role of school psychologists.
- Neighboring states have adopted pay-to-play and pay-to-participate in non-core academic school activities. These include sports, clubs, music and even AP and college-level high school courses. To my knowledge, this concept is usually accompanied by “scholarship” or needs-based supplemental funding to prevent kids from being left out. Play-to-play is very unpopular here, but Seaford now has the equivalent of pay-to-play in Middle School, and I don’t see that changing quickly.
Something has to give and to whatever extent they can resist, it will not be the taxpayers doing the giving much longer. A school income tax is not the answer. Scalpel!