Maine Schools in Focus: Toward a Fairer Tax for Schools
Editor: Gordon Donaldson
We often hear that Mainers are “overtaxed.” Such arguments arise during school budget time. But are Mainers “overtaxed” when it comes to their schools?
Consider our government spending on schools in comparison to other states. According to the National Center for Education Statistics, Maine in 2010-11 devoted 21.5 percent of local and state general expenditures to K-12 Education. The U.S. average was 21.9 percent. From the spending viewpoint, it doesn’t appear that we are “overtaxing” our citizens, at least in comparison to the national picture. In fact, we seem to be putting about the same proportion of tax-raised funds toward our schools as most other states.
Another way to think about our tax effort is to separate the state contribution to school budgets from local contributions. The former come mostly from income, corporate and sales taxes; the latter almost wholly from property taxes. Throughout much of the past century, Maine towns and cities have paid most of the education bill:
- In 1960, local communities paid 76 percent, the state paid 21 percent (Federal: 3 percent)
- In 2000, local communities paid 53 percent, the state paid 44 percent (Federal: 3 percent)
- In 2011, local communities paid 51 percent, the state paid 40 percent (Federal: 9 percent)
The only time that our state share surpassed our local share was for several years during the 1970s (Donaldson, 2014). Despite the decision some years ago to require a 55 percent state contribution, local property owners have borne the majority of the tax burden for our schools.
Some argue that this, in fact, “overtaxes” those who own property, whether they are individuals or businesses. Tax reform proposals nationally have sought to increase the contribution from income taxes, arguing that income taxes are more progressive than property taxes. That is, they tax us according to our actual income “wealth” each year; those of us who make more, pay more. Vermont has reformed its school funding system to emphasize income wealth over property wealth. Mainers will vote in November on a “Stand Up for Students” measure that would increase income-based taxation for schools.
Looking at the local vs. state figures above, we now have a better balance between property tax and income tax in that the state contribution is now higher than it was in 1960. In fact, as a state, school spending amounts to 1.4 percent of Maine’s total property valuation; in 1960, our K-12 spending amounted to 2.9 percent of the state’s total property valuation. In this respect, our current property tax burden for schools appears fairer than it used to be. (Although one might wonder if there are types of property that now enjoy reduced taxation in comparison to 1960).
Despite this historical trend, funding for our schools continues to rely more on property taxes than in most other states. In 2008, Mainers ranked 13th nationally in the proportion of their income that went to local education revenues in the form of property taxes. That year, we ranked 25th in the proportion of our income that went to state education revenues, mostly in the form of income and corporate taxes (U.S. Census Bureau). Clearly, property owners continue to be comparatively “overtaxed” to support our schools. This is particularly onerous for Mainers, many in our rural towns, who are property-rich but on limited incomes.
What stands in the way of reaching the more equitable 55 percent state-share goal? Certainly, competition for state revenues is as great as it’s ever been, with higher education, health care, family support, prisons, mental health services, and an aging transportation system requiring funds. Policy initiatives, such as Governor LePage’s bill to eliminate the income tax, threaten to leave schools wholly at the mercy of local property owners. Efforts to “equalize” the tax burden across Maine’s cities and towns have had an on-again-off-again history since our Uniform Property Tax law in the early 1970s (which was repealed after only a few years).
The Legislature and the newly appointed Blue Ribbon Commission to Reform Education Funding and Improve Student Performance might consider these avenues toward more stable and more equitable funding:
- Examine the local property-tax burden on citizens, town by town, relative to their incomes. In towns where school budgets require citizens to dig more deeply into their annual incomes than in the average Maine town, state subsidies should make up the difference. The goal: to further equalize tax burdens across all Maine municipalities.
- Reexamine property tax codes with an eye toward relieving the burden on year-round homeowners and on Mainers who make their living on the land or are on fixed incomes. Are other types of landowners paying taxes commensurate with the value they gain from ownership?
- Resist the past practice of expecting school districts to solve the taxation problem on their own. Too often, this has pitted neighboring towns against one another, undercutting district effectiveness. Public schooling is a state obligation. Equalizing resources across our very diverse state is fundamental to equalizing educational opportunities from Lubec to York, Camden to Mars Hill.
Sources: Donaldson, G. From schoolhouse to schooling system: Maine’s public education in the 20th century (Maineauthorspublishing: 2014); National Center for Education Statistics (www.nces.ed.gov); Maine Revenue Service (maine.gov); U.S. Census Bureau 2008 (Current Education Data: Finances)
Maine Schools in Focus is intended to share information that stimulates thinking, planning, and action to fulfill the mission of Maine’s preK-12 schools. Submissions must present ideas and data relevant to schooling in Maine and pose questions and suggest avenues for policy and action. They must be limited to 750 words.
Contact: Gordon Donaldson at firstname.lastname@example.org.