Wednesday, February 01, 2012

Two Great Hearings. It's not often that one gets treated to two great hearings in one day, but that's what happened for me today as both the Senate Tax and Senate Education Committees had informative hearings. The Tax Committee devoted a portion of its meeting to the effect of education-related levies on the property tax system as a whole. As you know, one of my pet peeves since the establishment of the referendum equalization program is the difficulty to get the equalization factors upgraded to reflect growth in property values. This has caused an erosion in the "value" of the program to property taxpayers in low property wealth districts, as the rising property values have increased the levy-to-aid ratio. Currently, a district below the equalizing factor pays more than two-and-one-half times in property taxes per $100,000 of property value than the district with the highest referendum market value in the state. When the current referendum equalization program was established in 1993, the effort per referendum dollar raised was nearly identical statewide. So, you can probably understand from where my sense of frustration emanates.

The reason for the lack of progress toward updating the referendum equalization factors is quite straightforward: there is a reluctance on the part of Education Finance Chairs (in both houses and of both parties) to use their resources to, in effect, make the property tax system more fair. Frankly, I can't blame them. The smorgasbord in the current education policy and funding debates provides the education-related committees with more than enough to discuss and more than enough tugs on the resources in their budget targets.

For this reason, I've tried on and off over the past decade to move the discussion of education-related property tax relief and reform into the domain of the Tax Committees in the House and Senate, but unfortunately, it's been difficult to get much traction. While we're a long way from establishing the discussion on the need for updating the equalization program in the Tax Committee, the atmosphere in the committee this morning appeared conducive to that move.

I want to commend a number of individuals, starting with Senate Tax Chair Julianne Ortman (R-Chanhassen) for scheduling the hearing. Senator Rod Skoe (DFL-Clearbrook) did a great job of pointing out the problem of keeping the equalization program in the Education Committee. Senate Education Fiscal Analyst Eric Naumann has a marvelous Powerpoint presentation (discussion was so lively, he didn't get all the way through it) that I will try to get the "rights to" so I can post it on the SEE website. In all, it was a very rewarding hearing.

The Senate Education Committee heard a presentation from the Minnesota Department of Education on the waiver it is filing with the United States Department of Education and the new assessment system it is putting in place in order to be eligible to receive an award under the next phase of Race to the Top.

The new assessment system would create a number of categories that would recognize the level of achievement of schools. The assessment system would be based on four measures: (1) Proficiency--Are all the subgroups making their Annual Yearly Progress targets? (2) Growth--This would be measured by growth in average scores both by school and district. (3) Achievement Gap Reduction--This will have to be accomplished by the low-scoring subgroups improving more than the high-scoring subgroups. (4) Graduation rate--This is an added measure that promotes college and career readiness.

MDE presented this information in a Powerpoint and as in the case of the Powerpoint used in the Tax Committee, I will try to find a way to post this on our website.

Fiscal Disparities Report Posted. The final report of the working group that studied the Fiscal Disparities Program has been posted on the Minnesota Department of Revenue website. It will be discussed in the House and Senate Tax Committees in mid-February. The Fiscal Disparities Program has been of great importance in promoting property tax fairness in the metropolitan area and hopefully the program will either be retained or other measures that work to remedy the disparities caused by significant differences in property wealth will be adopted.

It should be an interesting discussion and I am ready to say my piece in defense of the underlying logic of the program.

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