Getting a good start in life is not a game of chance. It is vital for Maine’s economy that our young people grow up healthy and educated and with access to opportunities to succeed no matter where they live in the state.
Yet, the Maine Legislature has consistently failed to adequately fund local schools. Maine has never met its legal obligation to fund 55 percent of local education costs — a requirement put in place by a 2004 citizen initiative to help towns and cities slow the rise in property taxes and mitigate inequalities in funding between school districts.
Last November, Maine voters approved a 3 percent surcharge on annual income over $200,000 to ensure fair school funding for years to come. The citizen initiative would have raised an estimated $320 million for public schools over the next two years. This would have met the state’s funding obligation, and paid for the textbooks and teachers our kids need to thrive.
But lawmakers sided with wealthy special interests by repealing the voter-approved surcharge to fund public education and giving them tax breaks instead.
Now Mainers are being sold the idea that an additional $162 million in the biennial budget slated for schools over the next two years is somehow a good deal. But the truth is Maine schools lost nearly $160 million of what voters approved with no guarantee of adequate state education funding for our kids in the future, while the wealthy received a $320 million tax break.
When contrasted with the tax breaks the top 2 percent of Mainers will enjoy over the next two years, the increased school funding looks like less of a victory for schools and more like a consolation prize. One point for the kids. Two for the rich.
With the 3 percent surcharge repealed, the wealthiest 5 percent of Mainers, those earning more than $153,000 a year, pay on average the lowest effective state and local tax rate. That means you and I pay more than the wealthiest Mainers in the total amount of state income, sales and property taxes per dollar earned. That makes our tax code out of balance. Another point for the rich.
This picture becomes more out of balance when you consider that the tax breaks for the wealthiest are permanent, whereas the modest school funding increase is not. The additional education funding for the next two school years is equal to half of what voters approved, and it was cobbled together without any new revenue source to guarantee we can support good schools into the future.
Without a new revenue source, the state is unlikely to fully meet its obligated share of education funding, and we may be headed for a significant education cut in the 2019-2020 school year. The struggle to close the gap will pit education against other critical state priorities like infrastructure, health care and other state funding for towns. When the state pays less than its 55 percent obligation for education, this means towns may increase property taxes to supplement the school budget or make cuts in teaching positions or other town services.
Property taxes are the largest source of revenue for local communities. Chronic underfunding for education by the state means constant pressure on towns to increase property taxes, making the tax code less fair. Unlike income taxes, property taxes aren’t based on ability to pay. Low- and middle-income Mainers pay a higher proportion of their income in property taxes than wealthy Mainers. Another point for the rich.
Even larger disparities appear between property-rich and property-poor communities. Communities with very high property values can raise a large amount of resources from very small adjustments in the property tax rate, but communities with lower property values must increase their rate much more to raise the same amount of resources.
That’s why a community like York can sustain high quality schools and services on a tax rate of $10.95 per $1,000 of assessed property value, while Houlton, a town with a roughly a sixth of York’s property value per resident, has a tax rate of $22.25 to balance its budget. Property-poor towns are less able to make up the difference when the state underfunds towns, which worsens geographic disparities in school and community services.
If special interests continue to rule the Legislature and block new revenue to achieve full education funding, our kids won’t get the quality education they need. Maine’s tax code will become even less fair as Mainers pay more in property taxes as a result of inadequate funding of schools. And Maine’s economy will become more exclusive, leaving behind students from low- and moderate-income families.
Game. Set. Match.
Sarah Austin is a policy analyst with the Maine Center for Economic Policy.