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Education
OFFICE OF LEGISLATIVE RESEARCH

OFFICE OF LEGISLATIVE RESEARCH

 

SCHOOL FINANCE AND PROPERTY TAX REFORM

 

 

June 21, 2000

2000-R-0633

By: Saul Spigel, Chief Analyst

 

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).

 

Continued at the following website:  http://www.cga.ct.gov/2000/rpt/olr/htm/2000-r-0633.htm