School funding panel studies tax ideas

AUGUSTA – A committee looking to reform the state’s school funding law decided Friday to examine two proposals that call for imposing a cap on the mill rate for local school property taxes and expanding the sales tax base to pick up needed revenue.

The recommendations, which were greeted by charges they would usurp local control, were submitted to the Education Funding Reform Committee by two of its members, Sen. Peter Mills, R-Cornville, and Rep. Bernard McGowan, D-Pittsfield.

The 14-member panel consists of legislators from the Appropriations, Education and Taxation committees. It was appointed last session to come up with ways to equalize the method of raising money for education by reducing reliance on property taxes.

On Friday, the committee appointed several members to estimate costs and draft recommendations that could go before voters in a November 2002 referendum. Residents would be asked whether they wanted to cap the mill rate for education and fund the difference by broadening the sales tax base. The proposal would require a constitutional amendment because of the shift in funding mechanisms.

Local rights activist Mary Adams of Garland blasted the ideas, charging they would interfere with local control. She said they were a throwback to the uniform property tax the Legislature adopted in 1973, and that was repealed several years later by referendum. Adams spearheaded the effort.

“It seems to me you’re moving to a statewide property tax,” Adams told the group. “You’ll do this over my dead body. Localities should always control the property tax. If the state caps the tax, the state controls the tax.”

Even though some communities would temporarily see a lower mill rate for education, there’s nothing to stop the state from raising the mill rate later, she said.

“There would be so many unintended consequences,” said Adams. She didn’t buy legislators’ denials that the current proposals were similar to the uniform property tax that caused such an uproar years ago.

Both proposals call for repealing the homestead exemption tax and the Business Equipment Tax Reimbursement program.

Mills’ proposal would set a school property tax rate at 6 mills for homes, businesses, farms and open space, and would reduce or eliminate property taxes on business equipment. State funding would be dependent on abiding by the limit, he suggested.

McGowan’s recommendation calls for setting a property tax rate cap of 4 mills for education funding in 2004 that would be applied to all primary residential property and all parcels over a minimum acreage. That year, a cap would be set at 8 mills for all business property, but would be reduced over the next five years to 4 mills. That same year, a cap of 12 mills would be applied to all property other than primary residential, business and undeveloped property.

While a school district or municipality would be permitted to exceed the property tax caps for education, the overcap millage would be assessed against homeowners only, according to McGowan’s proposal.

Legislators said the average property tax rate for education is 11 mills, while the average general rate is 17 mills.