Thursday, February 27, 2014

Vic’s Statehouse Notes #174 – February 26, 2014

Dear Friends,

Let’s view the controversy over cutting the business property tax through the lens of the K-12 school voucher/school choice controversy:

Governor Pence has clearly favored private schools over public schools in the competitive marketplace of schools which we now have in Indiana. When public schools are kept in a perpetual state of financial uncertainty and budget cutting, they have a hard time competing with private schools for parent selections, especially when parents are often looking for small class sizes when they choose a school. Low school funding increases in the 2013 state budget – only 2% this year and 1% next year - have led many public schools to raise class size.

The Governor’s plan to eliminate $1 billion in business property taxes to help businesses has threatened schools, cities, towns, libraries and county governments with the latest self-inflicted crisis of financial instability. For public schools, that translates into more difficulty in competing in the school choice marketplace. Parents may not choose schools with well-known financial problems that are cutting services and even having trouble funding school buses. This is no time to give public schools another financial headache through a new round of funding cuts resulting from changes in the business property tax.

Twenty-two statewide associations representing local governments, schools and libraries have joined the “Replace Don’t Erase” Coalition. The Indiana Coalition for Public Education is one of the members. ICPE lobbyist Joel Hand has been attending weekly meetings of the “RDE” coalition, which is simply asking that the two bills that would cut business property tax, House Bill 1001 and Senate Bill 1, include dollar for dollar replacement money for any cuts enacted in business property tax to guarantee public schools and local government budgets are not harmed by the effort to attract more businesses to Indiana.

Stable funding for public schools is vital for the sake of over one million public school students in Indiana.

House Bill 1001

The House response to the Governor’s call to eliminate the entire business property tax was a locally based response. HB 1001 started out allowing each county to decide whether to zero out property tax on new business equipment. That move would guarantee that counties would not lose tax money currently coming in, but instead would stop the growth in new property taxes. Opponents say it would introduce a new era of cut-throat competition among counties, pressuring some counties to cut the tax when they really need the revenue growth.

After changes in the Senate, the latest streamlined version passed yesterday (Feb. 25th) by the Senate Tax and Fiscal Policy Committee would still cut a projected $2.0 million from public school revenue with no provision for replacement dollars.

Senate Bill 1

The Senate response to the Governor’s call was quite different. Senators introduced a bill to eliminate all business property tax for all small businesses, those with up to $25,000 in assessed value. This had a much smaller price tag than the Governor’s original plan costing $1 billion. It also cut red tape for small businesses. The Governor has said that he would support replacing the local dollars lost with state tax dollars, although Senators have not sounded like they want to back up his idea with state dollars in a non-budgetary year.

It’s All About Competition

Once again, public schools stand to lose big if the equipment property tax is dropped. Kathy Friend, Chief Financial Officer for the Fort Wayne Community Schools, has said that under the Governor’s original plan the Fort Wayne schools would take a bigger financial hit from losing this property tax money than they did when property tax caps were put into place four years ago.

If Governor Pence can keep public schools weak and reeling financially, the private and parochial schools can gain the upper hand in the live or die competition that is now a constant for schools. Public schools must have the financial support they need to remain the stable community force that they have been for decades.

This issue is active in both the House and the Senate. Let all of your legislators know that schools and local governments don’t need a financial crisis over the business property tax. Too many school districts, such as Decatur Township and Muncie, are already facing huge problems in funding school bus transportation. Any change in the equipment tax should be accompanied by a direct replacement of the lost local property tax dollars by state dollars.

The unrelenting erosion of financial stability in Indiana’s public schools must end. “Replace Don’t Erase!”

Thanks for contacting your legislators and for your active support of public education!

Best wishes,

Vic Smith

ICPE has worked since 2011 to promote public education in the Statehouse and oppose the privatization of schools. The 2014 session of the General Assembly is now past the half way mark in its deliberations. We need your membership to help support our hard working lobbyist Joel Hand. Many have renewed their memberships already, and we thank you! If you have not done so since July 1, the start of our new membership year, we urge you to renew by going to our website.

Although ICPE entered this session of the General Assembly in better financial shape than in any previous session, we still need additional support to fund the commitments our board has made for our lobbying efforts. We are counting on your financial help during the session.

We have raised the needed money in past sessions, and we must do so again. We need additional members and additional donations. We need your help and the help of your colleagues who support public education! Please pass the word!

Go to for membership and renewal information and for full information on ICPE efforts on behalf of public education. Thanks!

Some readers have asked about my background in Indiana public schools. Thanks for asking! Here is a brief bio:

I am a lifelong Hoosier and began teaching in 1969. I served as a social studies teacher, curriculum developer, state research and evaluation consultant, state social studies consultant, district social studies supervisor, assistant principal, principal, educational association staff member, and adjunct university professor. I worked for Garrett-Keyser-Butler Schools, the Indiana University Social Studies Development Center, the Indiana Department of Education, the Indianapolis Public Schools, IUPUI, and the Indiana Urban Schools Association, from which I retired as Associate Director in 2009. I hold three degrees: B.A. in Ed., Ball State University, 1969; M.S. in Ed., Indiana University, 1972; and Ed.D., Indiana University, 1977, along with a Teacher’s Life License and a Superintendent’s License, 1998.

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