Sunday, April 08, 2007

Chapter 70 - Joint Resolution Spreadsheet

DOE has posted the joint resolution spreadsheet for Chapter 70 this year. That is an improvement over last year, because it allows the details to be reviewed before, rather than after, the legislation is finalized.

The result has a couple surprises. One is that the legislature raised property taxes and nobody noticed, in two different ways, totaling several tens of millions. One moves towards taxpayer equity, by $20 million; the other moves away from it. Here's the one that moves towards equity, as quoted by the website:
Effort increase for low effort communities. In FY07, municipalities whose required contribution was below their target had their requirement increased by their municipal revenue growth factor. For FY08, House 1 retained this requirement. The Joint Resolution provides for a small additional increase, above the municipal revenue growth factor, for those communities significantly below their target. This change, which results in about $20 million in increased requirements statewide, is intended to slow the growing gap between their target and required contributions. Even with the change, the excess deficit for low effort communities remains $322 million, about the same as in FY07. It should also be noted that actual spending in many of these municipalities already exceeds their requirement; for these communities, increases in the requirement will not require increases in local appropriations.

The one that moves away from equity is that the legislature scaled back the governor's 30% effort reduction to 25%. The governor had already scaled back the legislature's preannounced intention to apply 40% effort reduction.

For towns that are members of regional schools, effort reduction means bringing comparable towns to comparable required spending levels. So, unless the Senate chooses to revisit the issue of fairness of regional school allocations, it looks like another year of arbitrary and capricious demands by the state. This is unfortunate, because there are several ways the legislature could have begun to restore equity on the spending regulation side of the equations, at little or no cost to the state.

The cynical might imagine, if this is indeed all the help that overburdened localities that have been unfairly singled out to pay effective surtaxes get in a year when the governor was elected with a message of flexibility to ease property tax burdens, that there is little interest among elected officials in allowing any town to reduce state mandated spending that results in unequal burdens for comparable locales, even if the legislator's formulas and white papers say that is a goal.

Back to the spreadsheet, the net changes are that last year's downpayment and growth formulas were both fully restored (no prorating on the growth formula either). And the legislature made one smart fiscal move, applying downpayment aid at 30% even though effort reduction was applied at only a 25% rate. This means less locales will show up in the baseline aid figures next year before "discretionary" increases begin, I suspect from my two-year models on the order of about $10 million. I don't know if this was an intended consequence, but it is a reasonable one.

Summarizing the locales that "lost out" from the governor’s aid numbers to the legislatures', several were among those making the "effort increase for low effort communities". The rest where the artificial winners using the House1 downpayment/growth aid formula.

But the biggest losers, in terms of fraction of budget, were among regional school members whose property taxes were raised by the legislature, which the press didn't even notice. I haven't tallied up these totals yet, but it's a noticeable fraction of local property tax revenues for several towns, in a year when the legislature had promised relief, rather than increased burdens.

Message from several towns to the legislature - please spend your money, rather than ours. If you need to spend our money, make sure you're doing it fairly, and take credit for raising our property taxes when you do it.


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