29 January 2022 — 1758 mst

Why the tax cap initiative (CI-121) is
bad for Montana and bad for public schools

Guest essay by Jim Smith

Republicans are pushing a new Tax Cap Initiative (CI-121), to be on the ballot for Montana voters. CI-121 limits annual increases in valuations of residential property to either 2% or the inflation rate (whichever is lower) when assessing property taxes if the property is not newly constructed, significantly improved, or had a change of ownership since January 1, 2019. CI-121 establishes 2019 as the base year for the valuations of residential property. It requires the Legislature to limit total ad valorem property taxes on residential property to 1% or less of the assessed valuation.

If passed, CI-121 will drastically change how the state funds education. Currently, 29% of public school funds come from local property tax, 64% from state aid and 7% from federal and other sources. The Governor’s Budget and Program Planning analysis of CI-121 predicts an $84 million dollar decrease in school funding in the first three years.

This tax cap applies in every school district. This takes local control of school funding away from communities. Why? Because special mill assessments that local citizens have approved will be negated if the combined state tax and mill levies exceed the cap, so the local taxes will be uncollectable.

Modeled after the infamous Prop 13 in California, this tax cap idea has been around for years. While it sounds good to some folks, who think their property tax bill is going to go down, this is one of the worst things that could happen to Montana’s public education. The big question is where is all this revenue shortfall going to be made up? We don’t have to try to make predictions about what will go wrong, we can look at California and learn our lesson from facts.

First, the state will move to impose a sales tax on everything from food, utilities, clothes, furniture, you name it, they’ll tax it. Think this is just a pipe dream and “it can’t happen here?” How did this play out in California? Sales tax rates went from 3.5% in 1970 to where they are today, at 8.75% statewide. In addition, local municipalities have imposed sales taxes to make up for the lost revenue from property taxes. In many towns the sales tax rate is now 10.75% on everything. Imagine adding that to nearly everything you have to buy.

But what if a sales tax isn’t implemented? Be prepared for the decimation of your local school budgets and the programs offered in public schools. First to go will be music and art programs, then summer school, libraries, after school programs, and school field trips. Funding per student will drop, the quality of education and teachers, who now will be paid less, will also drop. This happened in California, and if CI-121 passes, it will happen here.

Also will be the loss of local control of public school systems and program decisions. Why? Because local funding will be overtaken by centralized state funding and the old “he who has the gold makes the rules” paradigm will kick in. These are all what happened in California, which went from the fifth best school system in the country to the forty-first in terms of funding per pupil, and relative education quality. Once you erode local funding and control of schools, you erode public confidence.

Another thing that will happen is the increase of the number of students per classroom. Teachers, who are relatively underpaid in Montana, will be further burdened by the additional workload and responsibility. Good teachers will leave, retire early or just give up. Rural school districts, who are already struggling to attract teachers and maintain their school systems, will come to the brink of collapse from underfunding and understaffing. Don’t think it will happen? Just look to California, one of the wealthiest per capita places on the planet, but whose school system has been devasted by property tax caps.

Bottom line? Don’t sign the petitions being circulated, don’t be fooled by the promise of lower taxes, and don’t vote for CI-121 if it makes it to the ballot in November! It’s just another attack on the public school system.

Jim Smith, M.A., Helena, is a long-time social activist, retired from working in the private sector. He served seven years on the Board of the Montana Veterans Foundation and was a founding member of Montana Project Healing Waters Fly Fishing (PHWFF).

The opinions of guest essayists are their own and may not be the opinions of Flathead Memo.