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Serving Northern St. Louis County, Minnesota

Minnesota Miracle?

Legislature shifting school tax burden back to local property owners

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They called it the Minnesota Miracle. Rising discontent with soaring property taxes fueled a revolution in school funding, which had been relying solely on local property taxes, creating vast inequities in the quality of education between property rich districts and property poor ones.

A series of reforms, which came to be known as the Minnesota Miracle of 1971, made the state responsible for more of the funding of public schools and provided relief to taxpayers.

The Minnesota Miracle stayed largely intact until 2002, when a new reform movement, touted as the second Minnesota Miracle and promoted by then-Gov. Jesse Ventura, was supposed to shift even more of the school financing burden to the state.

But that miracle was a mirage. Enormous state spending that appeared to direct more funds to school districts instead simply provided tax relief disproportionately to the wealthiest Minnesotans living in the wealthiest districts.

That leads us to the current spate of reforms aimed at addressing inequities in education across the state. But instead of pouring more state resources into schools, the Legislature has empowered districts to raise more funds through local property taxes. In 2013, it approved a measure that allows districts to collect up to $300 per pupil through an excess operating levy without requiring voters’ approval. A year later, the state expanded its local optional revenue program to all school districts, enabling districts, most of which had adopted the excess operating levy, to collect another $425 per pupil through local taxes.

Now a newly-established long-term facilities maintenance program increases the amount that districts can tax locally for deferred maintenance and health and safety projects. The tax jumps from $64 per pupil to $193 per student in fiscal year 2017 and, by 2019, will increase to $380 per pupil.

Tom Melcher, director of the Finance Program Division for the state Department of Education, says the increase is being driven by a shortage of dollars to address maintenance issues at schools across the state and the difficulty of trying to pass a bond to pay for repairs.

While we understand the concern about ensuring the upkeep of facilities, we’re not convinced this is the best solution. Districts have difficulty passing bonds because taxpayers already feel burdened, and because, in many cases, taxpayers aren’t convinced that putting more money into facilities will actually enhance educational quality. Bypassing the need for a vote and passing a higher property tax may get districts the building improvements they need, but it puts more of a tax burden on property owners. And the property tax is the most regressive type of tax. It’s far better to fund school needs from more equitable revenue sources, levied by the state.

The state will provide some help to districts whose net taxing capacity does not exceed 123 percent of the state average. But even so, putting the burden back on local property taxes only exacerbates the gap between the district’s richest and poorest districts.

Communities with large tax bases will benefit more from the growing dependence on local property taxes to fund schools while those with smaller or poorer tax bases won’t be able to generate the same dollars and benefits.

Under Gov. Mark Dayton, the state has made significant improvements in school funding, from increases to the basic aid for pupils to greater investment in Early Learning. But some reforms — such as giving districts more authority to tax their residents without their input — just further dismantle the Minnesota Miracle.

It’s time to get back to the state’s original intent — to provide a quality education in every district in Minnesota and eliminate the very inequities it is enlarging by putting a greater burden on the local taxpayers. We need another miracle.