Equalization Proposals Discussed in Tax Conference Committee. The tax conference committee tackled the provisions in the Senate bill relating to referendum equalization and providing districts with little or no referendum levy with added financial support. The Senate has altered its approach a bit from the initial proposal that was contained in the tax bill. Instead of creating a new revenue category (early advancement revenue or EAR), the altered approach calls for making the first $300/PU a board-authorized levy equalized at a very high rate. Districts with less than $300/PU in referendum authority could, by board action, raise that amount by board action. Districts with more than $300/PU would have the first $300/PU converted to board-authorized authority that would not have to be renewed by voters. This first tier, as stated earlier, would be equalized at a rate approximately 65% higher than the current first-tier equalizing factor. It is difficult to gauge the exact increase in the equalizing factor because the Senate omnibus education finance bill radically changes pupil weightings and balancing the changes with the new "denominator" is inexact at this point. Rest assured, however, that the new first tier of the referendum (now board-approved) is increased mightily. The second tier of the referendum then becomes the revenue space between $300/PU and $775/PU and that is equalized at a rate above the current first tier equalizing factor of about 15%. The third tier is the revenue area between $775/PU and the cap and the equalizing factor for that increment is well above that of the current second tier equalizing factor. So equalization increases all around and the opportunity for districts with low levels of referendum revenue to close the gap between themselves and districts with high levels of referendum revenue.
Hard to tell where the debate goes after today's exchanges. There is both support and skepticism coming from the House side. House Tax Chair Ann Lenczewski, while sympathetic to the plight of low property wealth school districts, has concerns that the metropolitan area continues to subsidize low property wealth areas in the state through property tax relief mechanisms like equalization of school aid formulas and local government aid formulas. The House position does little in terms of "yield adjustment" in its tax bill (it does increase referendum equalization in its education finance bill) and relies more on direct-to-taxpayer assistance through an improved property tax refund program.
The Senate is committed to accomplishing something in the area of school-related property tax relief this year and the current proposal is very strong. I would urge all SEE members to contact their members of the House of Representatives and urge them to take a serious look at the Senate proposal. While the Senate proposal does not recoup the entire erosion of the equalization program that has occurred over the past 20 years, it takes a big step toward righting the ship.