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Latest End Run Around TABOR Weakens Taxpayers’ Say Over Local School Funding

State lawmakers have stacked the deck against voters and their authority to decide how to fund local schools. Signed into law this spring by Governor Ritter, Senate Bill 291 weakens taxpayers’ rights by limiting voter options and evading the clear intent of the Taxpayer’s Bill of Rights (TABOR) to provide reasonable limits on government growth.

Before SB 291 if voters in a school district sought to bring back constitutional limits on property tax revenues, the state would have to fund the difference. SB 291 discourages school districts from reinstating the revenue limits by promising to withhold the state’s backfill amount.

SB 291 leaves taxpayers worse off. Residents and business owners in most local school districts already pay higher taxes due to Governor Ritter’s “mill levy freeze.” Passed in 2007, Senate Bill 199 effectively increased property taxes in 104 of the state’s 178 school districts.

Governor Ritter’s 2007 law created a net tax increase totaling hundreds of thousands of dollars for property owners in 51 school districts, with 27 other districts experiencing an increase in the millions. For 2009-10, the Colorado Department of Education projects the numbers of school districts will grow to 64 and 32, respectively.

Taxpayers in Mesa Valley School District were hit the hardest by the mill levy freeze, paying $29.8 million more in property taxes 2007-08 alone. Overall, Ritter’s tax hike raised an extra $117.8 million statewide in 2007-08. Projections for 2009-10 are for a total increase of $148.9 million in local property taxes.

The state of Colorado was sued because lawmakers adopted the “mill levy freeze” without taking the tax increase for a vote of the people, as TABOR requires. Denver Judge Christina Habas ruled that the measure violates TABOR and therefore is unconstitutional. However, Ritter appealed the lawsuit. In a ruling that ignored the plain meaning of the constitution, a divided state supreme court upheld the mill levy freeze.

The decision to uphold SB 199 prompted the threat to bring back local revenue limits. Without SB 291 voters would have incentive to restore local property taxes to reasonable levels. School finance laws then would have required the state to compensate by increasing the district’s funding to meet the per-pupil formula.

Under SB 291, though, that is no longer the case. Schools will be treated differently based on voters’ preferences to restrain local property tax rates. School districts will be penalized with less funding if voters reinstate the limits. As such, this bill undermines the state’s constitutional guarantee of a “thorough and uniform” public education.

The state revenues generated from SB 199’s local tax hike initially were promised to fund other statewide education priorities, including early childhood programs. Even with higher local property taxes in place, the state’s share of spending on education is greater than it was before SB 199.

More state spending brings more state control. And when the state has more control, schools have less incentive to improve performance and to be competitive with other schools. The “mill levy freeze” raised local property taxes. However, the excess revenue is largely directed towards statewide education programs instead of being sent directly to local school districts.

The state should not be allowed to bully citizens to keep them from reinstating the limits. Local voters should be able to decide whether their school district receives excess property tax funds.

Two possible avenues would provide taxpayers with relief. First, repealing SB 291 would allow local voters to restore spending limits if they so choose. This approach would decrease property tax rates for residents and businesses.

Second, a ballot initiative currently being circulated could enable voters to tighten state loopholes and limit growth in property taxes. The initiative would expire all suspension of TABOR spending limits in 2011, and would adjust mill levies downward unless district voters agree to a tax increase for excess revenue. Thus it would roll back Ritter’s tax hike and still allow districts to suspend the spending limits.

Let’s not punish schools based on their local voters’ preferences. Rather, let’s return power back to the people and help give our children a “thorough and uniform” public education.

Kristine Ysebaert, a senior at the University of Colorado at Boulder, is a research associate for the Independence Institute.