Problems with Proposition 2½ highlighted in national report

On May 21, 2008, the Center on Budget and Policy Priorities released a report, “Hidden Consequences: Lessons from Massachusetts for States Considering a Property Tax Cap.” With New York’s Commission on Property Tax Relief planning to recommend that the state impose a rigid cap on property taxes for education based on Massachusetts’ Proposition 2 ½, the report from the Washington, D.C.-based Center on Budget and Policy Priorities describes the problems the law has created in Massachusetts.

“Across Massachusetts, a number of communities have been forced to lay off teachers, police officers, firefighters, and other public employees; close fire stations; shut libraries, senior centers, and recreation centers or sharply reduce their hours; and scale back public school programs.  One town even turned off its street lights to save money,” said Iris Lav, the Center’s deputy director and co-author of the report.

According to the report, Proposition 2 ½, which limits the growth in communities’ property tax revenue for all services including education to 2.5 percent a year, has:

• Arbitrarily constrained local revenues without considering the actual cost of providing services.  “The fundamental problem with property tax caps is that they don’t make public services any less expensive,” said Lav.  ”Costs like employee health insurance and special education are largely beyond localities’ control, and they’re rising much faster than the cap allows.  Nor does the cap hold down the cost of heating buildings and operating school buses when oil prices are skyrocketing.”  When these things occur, as they have in Massachusetts, other services have to be cut to fit total expenditures under the cap.
  
• Made local governments heavily dependent on state aid.  In the early years after Proposition 2 ½’s adoption in 1980, large infusions of state aid prevented major loss of local services.  But state aid dropped dramatically in the recessions and state fiscal crises of the early 1990s and the early 2000s.  (Aid plunged by 33 percent after adjustment for inflation between 1989 and 1992, for example.)  This forced budget cuts in localities throughout the state — especially in low- and moderate income communities, which are the most dependent on state aid.
  
• Exacerbated disparities between wealthier communities and poorer ones in access to quality local services.  To maintain valued services, voters in higher-income communities have approved more overrides of Proposition 2 ½’s revenue growth limit than poorer communities have, and the overrides have been for larger amounts.  This increases the likelihood that an individual’s access to public services such as a decent education would be determined by her wealth and the community she lives in.
  
• Resulted in cuts to valued services rather than simply calling forth greater efficiency from local governments.  Proponents argued that Proposition 2 ½ would make government more efficient and would not entail major service cuts.  But the evidence suggests that the “savings” achieved under the law have come primarily through a decline in key local services, not through sweeping new efficiencies. 
  

“Having led a municipality for eight years under Proposition 2 ½, I have seen first-hand that the law does not permit adequate funding of core local responsibilities such as public safety and education.” said Northampton, Massachusetts Mayor Mary Clare Higgins.

The complete Center’s report is available at http://www.cbpp.org/5-21-08sfp.htm.

We are not alone

From time to time, School Committee members share information regarding topics that effect our districts. There was a recent discussion regarding the funding challenges we are all experiencing. I thought I would share one of those emails:

I am not going to get into a prolonged argument here, but suffice to say
that Local officials and citizens in North Reading have made a massive
effort over the last few years to rein in spending and to push for more
local aid. Where has that left us — still 13th or 14th from the bottom in
per pupil spending in the state. We have gone for an override two straight
years and have lost. We have elementary school libraries and computer labs
that are closed two or three days per week. Also this year, we close our
elementary and middle schools two hours early each Wednesday in order to
give our teachers the required prep time that they lost when we eliminated
or cut music, art, physical education and other courses. In addition, we
had to cut the physical education class option for high school juniors and
seniors and we have numerous classes with more than 30 students.

Thanks to great cooperation this year between various town boards, we will
be able to restore a full school week, every week, at our elementary and
middle schools, as well as some of the courses that were cut this year.
However, we still will have no physical education for juniors and seniors,
still only have ONE certified librarian in our entire school system, and
still not be able to open our computer labs

Last week in North Reading we had the misfortune of approving a $100 increase in athletic fees. Now, a student will pay $400 for the first sport and $100 each for the second and third. The family max is now $1,100. Thankfully, we could keep our busing fee at the bargain rate of $250 per student and our even bigger bargain student extracurricular fee at only $125. And, the big bonus with the extracurricular fee is that the $125 covers as many activities in which the student wishes to participate.

There has been much discussion of late as to the cause of our financial challenges. Is the crux of the problem due to mismangement of funds, inefficient use of revenue, i.e. new fire station, senior center, not being able to live within our budget, etc.? Could we continue to work hard and make sure we are spending every dollar in the most efficient way? Absolutely, but every organization aspires to the same goal. The point of my sharing this email with you is to say that we are not alone. There are many cities and towns facing similar problems to our own, if not worse. My question is, if we are all facing the same problem…..are we all not being financially responsible?