When is Money for Schools not Money for Schools? When It’s for Tax Cuts Instead
Why haven’t the property tax cuts included in Governor Walker’s budget proposal gotten much attention from the media or community advocates? One reason might be because of the way he has structured the tax cuts, which are mingled with state support for public schools. A new budget summary from the Wisconsin Budget Project includes information about the tax cuts and other parts of the Governor’s budget that affect taxes and state revenue.
Unlike income taxes or sales taxes, property taxes are levied by local governments, including counties, cities, school districts, and technical college districts. So when state lawmakers want to cut property taxes, they can’t do it directly. Instead, they increase the amount of aid to local governments while simultaneously prohibiting those governments from increasing their budgets. The result is that local governments must then cut property taxes.
In the state budget, this method of cutting property taxes shows up as an increase in state spending in aid for local governments. At first glance, it may look like local governments are receiving more resources, but in fact they are forced to pass the money through to property owners in the form tax cuts.
Governor Walker’s budget proposal includes $319 million in property tax cuts delivered in this way. He uses two different mechanisms to deliver the tax cuts, both of which are related to schools:
- An increase of $108 million in the amount of general support the state provides to school districts. The Governor’s budget would not allow districts to increase their budgets to use the additional resources in the classroom, instead requiring most districts to use that money to reduce property taxes.
- An increase of $211 million in the school levy tax credit. This amount is paid to municipalities who must pass the money through to property owners in the form of lower property taxes.
Governor Walker has said that one of the things his budget does is “increase state support for schools,” citing the increase in general support for schools and the school levy tax credit. While his claim is technically true, most school districts and municipalities will be required to pass through that increase in state support to property owners, in the form of tax cuts. The people who will benefit from the proposed increase in “state support for schools” are property owners, not schoolchildren.
In fact, most schools would have fewer resources to educate the same number of students, not more. That’s due to a $150 per-student cut in state support for public schools that Governor Walker has proposed for next year, in part to pay for the cost of the new property tax cuts and other tax cuts in the past.
Tax cuts have already taken resources away from public services that are crucial to building the foundation for future economic growth. Rather than doubling down on more harmful tax cuts, lawmakers should focus on policies that help students succeed and become part of a well-educated workforce. Balancing the budget on the backs of schoolchildren for the sake of new tax cuts will hurt Wisconsin’s economy both now and down the road.