You asked
about proposals before the General Assembly to shift education funding from the
property tax to other sources. You were also interested in what other states,
particularly Michigan, have done on
this issue.
SUMMARY
In recent
years, the local property tax has come under fire as the main revenue source
for public schools. Several states have considered alternatives, but only a
few, such as Michigan and Vermont, have acted to
reduce their reliance on local property taxes. The Connecticut General Assembly
has been presented with numerous proposals in the past few years to increase
the state's share of local education costs, but we were unable to locate any
proposals to remove local property taxes from the education funding mix. One
bill would have increased income tax rates to pay for increased aid to
education.
The Michigan legislature in
July 1993 eliminated local school property taxes and, six months later, placed
a Constitutional amendment before the voters to shift education funding to
state sources, including increased sales and cigarette taxes and new statewide
property and real estate conveyance taxes. The measure, which passed
overwhelmingly, also reduced the income tax rate. The new funding scheme
reversed the state and local contributions for K to 12 education,
with the state's share rising from 37% to 80%.
In 1998,
the Vermont legislature
replaced local school district property taxes with a statewide tax on property
or income, depending on the type of property and a household's annual income.
It did this in reaction to a state Supreme Court decision that addressed
inequities resulting from the state's reliance on local property taxes to fund
education. We have attached an OLR report detailing Act 60, Vermont's property tax
reform act (OLR 98-R-0809).