For several years, the state Legislature has been debating the merits of a proposed constitutional amendment that would impose limits on state and local governments’ ability to raise and spend taxes.  What was once popularly called TABOR, the Taxpayers’ Bill of Rights, has been reincarnated as TPA, the Taxpayers’ Protection Amendment.

Whatever its popular name, it appears that an actual vote by the Legislature is imminent.  Therefore, it’s time for legislators to put aside the rhetoric and sound bites and to take a careful look at the details of what is being proposed to amend our Constitution.

I have never been opposed to the concept of a constitutional provision to limit government’s ability to tax and spend.  I have also long maintained that I don’t need a constitutional amendment to do what I was elected to do.

As I look at the details of the proposed amendment, I am particularly concerned about its provisions related to public school districts in Wisconsin. For more than a dozen years school districts have operated under strong and effective revenue controls.  In fact, I would argue that the school revenue controls – which were imposed statutorily, not by amending the Constitution – have been the single most effective tax control adopted in this state for a generation.

Unfortunately, it appears the controls proposed for school districts under the constitutional amendment could undo all that.  Just as troubling, it also appears the amendment could seriously disequalize taxes and spending across school districts in Wisconsin – something that itself would appear to violate an existing constitutional mandate that requires school districts to be “as nearly uniform as practical.”

When the proposed amendment was introduced last month, I asked the Legislative Fiscal Bureau to analyze its effect on school levies compared to the statutory revenue controls in current law.  Because the proposed constitutional limits would not be in effect until the 2009-10 fiscal year, the bureau analysis estimated the effect of the amendment if it had been in effect for the current school year rather than the current statutory controls.

According to the Fiscal Bureau analysis, “In the absence of the statutory revenue limits, the total allowable levy under the joint resolutions would have been $3.71 billion, which would have been an increase of $117.8 million compared to the actual 2005-06 levy.”

That begs the question, why would we amend the constitution to increase property taxes more than $100 million?  How can that be labeled taxpayer protection?

The potential to disequalize school district funding is also troublesome.  The state Constitution requires the state to operate school districts that shall be as nearly uniform as practical.  That mandate underlies the state’s school aid formula – the equalization aid formula that in its simplest sense provides greater state aid to districts with low property values than it does to districts with high property values.  The intent of the equalization aid formula is to ensure that the same amount of tax effort is required to sustain the same level of spending.

It is the combination and interaction of the two primary sources of revenue for schools – equalization aid and property tax – that works to achieve the constitutional goal of equity among our 426 school districts.   The current statutory revenue controls were written with that constitutional mandate in mind and the same general relationship between state aid and property tax that is the basis of the aid formula is the basis of the revenue controls.  Simply put, under the controls if state aids increase, the allowed increase in property taxes is reduced.

Even under the equalization formula, disparities still exist among 426 school districts with wide-ranging differences in property values and per-pupil spending levels.    Generally, districts with very high property values can raise significantly more tax dollars with a lower tax rate than can districts with very low property values.  Thus, there are several very high-value school districts in Wisconsin that can spend high amounts per pupil with relatively low tax rates even though they receive very little state aid.  At the other end of the spectrum, many low-value districts derive most of their budgets from state aid but they still must have relatively high tax rates to sustain a lower level of spending than the “rich” districts.

In fact, the state Supreme Court upheld our current system when it was challenged several years ago, but it did so by a narrow margin.

When the revenue controls were enacted in 1993, existing tax-and-spending disparities were locked in place and early provisions of the controls had the effect of increasing those disparities over time.  Because the controls are statutory, however, the Legislature was able to act quickly to modify the controls to not only diminish that effect but to also begin to reduce the disparity between high- and low-spending districts.

It appears that element of equity would be lost under the proposed constitutional amendment, however.  As already noted, under statutory revenue controls, both state aid and local levies – the primary sources of school district revenues – are controlled.  Therefore, an increase in state aid generally reduces any increase in the property tax.

Under the proposed constitutional amendment, however, only local taxes and fees – not state aids – are considered revenues to be controlled. 

Consider the possible effects on two school districts: Neenah and Beloit.  Using the most recent figures compiled by the Legislative Fiscal Bureau the two districts are comparable in size: Neenah has 6,378 pupils and Beloit has 6,833.  Their per-pupil spending amounts are also similar:  Neenah spends $8,463 per student and Beloit spends $8,350 per student.  But because their property values are very different – Neenah has $469,695 in value per student, while Beloit has $179,162 in value per pupil – the level of state support is significantly different.  Because it is richer in property value Neenah receives about 58 percent of its budget in state aid but Beloit, a much poorer district in value, receives 82.5 percent of its budget in state aid. 

Neenah’s school property levy is $26.8 million; Beloit’s is about half that, $13.2 million.  Under the proposed amendment, the levy is the primary revenue that is controlled.  If we assume that all other factors remain constant – in other words that each district raises the same amount in local fees and those fees remain constant and that the allowable growth factor, a combination of enrollment change and inflation – the effect of the amendment is significantly different in each district.  If the growth factor for each district is 2.6 percent, Neenah could raise taxes $681,000 and Beloit could raise taxes $343,200.  That two-to-one disparity will increase over time.

The state’s equalization aid formula can address some of that disparity by increasing the amount of state aid to schools. But that’s a costly solution and the amount of state revenue that can be raised will also be limited under the constitutional amendment.  As the gap in allowed revenues increases from year to year, the state would be devoting more and more of its own fixed revenues trying to fill an ever-expanding gap.  Trying to address the disparity by shifting state aid away from richer districts may only exacerbate the problem because the amendment allows any district to increase revenues beyond its limits if in any year it receives less state aid than in any previous year.

This potential to disequalize school district revenues is troubling because the last time current school finance system was challenged, the Supreme Court upheld the system but only by a narrow one-vote margin.  That in itself raises an interesting question:  could the proposed constitutional amendment itself be found unconstitutional?

Rather than focus on a constitutional amendment that has the potential to disequalize school funding, the Legislature should take a serious look at fixing the state’s school-aid formula to ensure it will withstand any future constitutional challenge.  I believe my own Equity in Education Act would be a very good place to start.

As the author of current revenue controls on schools, I certainly have no problem with the idea of protecting taxpayers by limiting the growth of school spending.  In fact, the school district revenue controls are working.  That was proved once again this week when school districts across the state held referendums to exceed the controls.  School boards that believed they needed more revenues than the controls allow took their cases directly to the voters.  In the end, as it has been for more than a decade, when the school boards can make the case, the voters will approve the spending.

--  Sen. Ellis is a Republican representing the 19th Senate District.