Ashe proposal would stop raid on public school funds

January 30, 2009

This week, I introduced legislation that would abolish a very unsuccessful and unpopular government program under which millions of state tax dollars are funneled to private schools through tax credits to organizations that sponsor scholarship vouchers for those schools.

HB 175 would repeal the so-called Student Scholarship Tax Credit program, which was begun last year as a way to encourage contributions to private school voucher funds. Supporters of that legislation had set aside $50 million for the tax credits, with only $6.5 million actually being awarded.

Every dollar taken out of the state budget for the purpose of promoting private education is a dollar that should rightfully go to our public schools, which already will have suffered $2 billion in state funding cuts if the governor's new budget is approved. And every state dollar taken from our public schools is another dollar homeowners have to make up in higher property taxes.

The private school voucher tax credit program was a bad idea last year and bad policy this year. Hopefully, HB 175 will keep it from being around next year. The legislation was assigned to the House Ways & Means Committee for consideration.

For quicker action to address similar budget shortfalls in the future, I have co-sponsored a constitutional amendment that would enable half the members of the legislature to call a special session when there is a 3 percent or greater decrease in the governor's revenue projection.

Last summer, I was among the legislators who called for a special session of the General Assembly for the purpose of rewriting the state budget when the state's revenue collections began to plummet. But because the governor refused to do so, and the Constitution requires a three-fifths vote of the House of Representatives and the Senate to call a special session, we are now faced with a budget crisis that got worse as the year went on.

Had HR 138 been in effect last year, we could have found half the votes in the General Assembly, which would have allowed us to roll up our sleeves and get to work on prioritizing state spending in a special session. As a result, lawmakers would have had more time to evaluate state programs and budget priorities, so perhaps the state would not have had to kick veterans out of nursing homes, close crime labs, eliminate school nurses and raise property taxes. A simple majority vote to call a special session will hopefully avoid these hasty and drastic actions in the future.

HR 138 was assigned to the House Appropriations Committee for consideration.

Property taxation moved to the top of the legislative agenda in the House of Representatives this week. A majority of House members voted to approve HB 143, which would eliminate the $428 million Homeowner Tax Relief Grants pledged to homeowners since 1999.

These grants are then passed on to local governments as tax credits to property owners. Under HB 143, future Homeowner Tax Relief Grants would be subject to triggers, and not having these grants go to local governments means homeowners could pay an additional $200 to $300 in property taxes, beginning with the 2009 tax bills.

The legislation now goes to the Senate for its consideration.

A better alternative is HR 7, which would amend the Constitution to require the funding of homeowner tax relief grants every year by the General Assembly. Under HR 7, the homestead exemption could be no less than $8,000 and no more than $18,000 of the assessed value of a taxpayer's homestead or the taxpayer's ad valorem property tax liability on the homestead, whichever is lower.

The House Ways & Means Committee favorably reported a proposed constitutional amendment, HR 1, which would limit the annual increases on the reassessment valuation of both residential and nonresidential property to 3 percent, or the rate of inflation, whichever is lower.

Under the proposed change, property values could be reassessed upon the sale or transfer of the property at fair market value, which would not exceed the sales price. The amendment would also ratify property tax freezes and limitations already in place in some counties.

Supporters of the legislation claim HR 1 would bring an end to the so-called "back-door" tax increases by local officials who use valuation assessment hikes to bring in more revenue without raising the millage rate. Opponents contend that local government revenue decisions should not be mandated from the state level and should instead be left up to county commissioners and school board members who are more familiar with the needs of their communities.

HR 1 is actually a flawed piece of legislation. It needs to go back to committee for considerable changes before it reaches the House floor.