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Jun 09

In Defense of Revenue Limit Law

One of my favorite reforms from the Tommy Thompson era is the revenue limit law for school districts.  This 1993 law is a testament to faith in the wisdom of local voters.  The law ended sharp property tax increases by requiring voter approval for a local district to raise revenue beyond a limit based on enrollment and previous spending.  The law endures, having weathered partisan swings in state government, because it grants taxpayers an element of control to balance the power of their local school board.

School districts rely on a blend of local property taxes and state support.  Under this law an increase in state funding lowers the local property tax burden unless the voters approve an overall revenue increase.  A school board wishing to spend more than allowed by the law must first get voter approval.  A more accurate name could be the “referendum threshold” law.  School boards may independently spend up to the “revenue limit”, but spending over the “limit” requires a district referendum to ask voter permission to exceed the limit.

Last week some members of the state assembly proposed a partial exemption from the law for about half the districts in the state.  Their proposal weakens the referendum by allowing 208 school districts with annual spending lower than $9,800 per pupil (close to the state median) to increase their revenues to that amount without going to the voters.  This proposal is unnecessary and based on false premises.

The authors wrote “Levy limits (sic), while useful, have left frugal districts locked into low spending limits.”  The facts show otherwise.

Every district with spending per pupil under the state median could be said to be “lower spending”, not necessarily “frugal”.   Do local property taxpayers think spending $9,700 per student each year is “frugal”?  The answer is not to allow every district in the lower half of the spending distribution to increase their spending to the median.  In Lake Wobegon “all the children are above average”.  In the real world, simple mathematics dictate that half the districts will always be below the median.   Removing spending restraints on the lower spending half of the districts isn’t the answer.

The authors have mentioned a few districts they think are “locked into low spending limits”.  Yet voters in Elkhorn, Green Bay and Tomahawk already approved over-ride requests in recent years, so they clearly aren’t locked in.  In Manawa, Marinette and Merill, the boards have not asked their voters to exceed the limit even once in the last five years.  An exemption is hardly needed for districts that haven’t even gone to a vote.

In fact a review of election records reveals that over half of the 208 school boards that would be exempted from the limits haven’t asked their voters for permission to exceed the limit during the last five years.  Why circumvent a requirement that hasn’t even been tried?  When voters are asked for an increase, they approve more than two out of every three.  Among the districts that would be granted this new exemption 40 % have already passed override votes during the last five years, often on a second attempt after the first plan failed to gain approval.

In the years since Act 10, the success rate for school boards asking to exceed their revenue limit has improved to 73% with 199 of 274 approved.  More than two thirds of the requests to exceed the limit long term have passed, and more than three quarters of districts succeed when asking to exceed the limit for a few years or less.  Districts in the upper half of the spending distribution go to referendum less often but succeed more frequently with an 76% passing of 115 votes in the last five years, while lower spending districts successfully exceeded the revenue limit in 69% of 159 attempts.  Our most cost-effective districts are hardly “trapped”.

The proposal would ignore the will of the voters in districts like Amery, Denmark, Southern Door County,  where taxpayers voted at least once in the last five years to exceed the limits but rejected extra spending earlier this year.

Even worse, the proposal would allow a property tax increase in the handful of lower spending districts (only 14  statewide) where voters haven’t approved going past the limit even once in five years but instead rejected a over-ride request.  These voters in lower spending districts at Cameron, Cashton, Chilton, Gillett, Hayward, Hortonville, Howard-Suamico, Kiel, Menasha, Necedah, Osceola, Phillips, Pulaski and Westby rejected board requests to exceed their limits.  Does this mean these districts are “locked in” to lower spending?  Not hardly.  Odds are if they tried at least three times they would find a plan their voters could approve.

Notice that 12 of these 14 districts are represented by Republicans in the state assembly. Voters in these districts elected Republicans who vowed to control property taxes, including Governor Walker and their own representative.  These voters exercised their right to say No to higher local taxes.  Republicans in the legislature should respect those voters and the enduring legacy of this Thompson era reform that still functions well today.

My former colleagues in the legislature should always put the taxpayer first.  Voters appreciate the right to serve as a balance to their local school board.  It’s the reason why this law has survived so long.