Well, the moment we’ve all been waiting for arrived a week ago. The Blueprint Education Bill, aka “Kirwan” has finally been introduced. Most of what I predicted last week came true. SB1000/HB1300 did follow the policy recommendations that were made by the commission. It did not change any wealth formulas. It did not change any funding formulas for the split between the State and the Counties. There was no timetable for a County phase in, as recommended by the Kirwan funding workgroup. It does allow for school expenses, that might be paid for in another county budget, such as school health nurses or resource officers to be included. Also, if the economy does take a downturn, it will allow funding to remain flat and not increase for that year. But the biggest problem is it absolutely does not identify any funding source for how to pay for it.
Finding a position that all the Counties could agree to did not prove to be as challenging as we might have thought. There are going to be proponents and opponents for what is in the policy of the bill. We may not agree on what tax rates should be and how it should be spent. But what MACo and all the counties approved was a statement that said the State should be paying for all of this new education expense.
This excerpt from the MACo statement explains why.“The State of Maryland should live up to its Constitutional obligation and stand behind its own ambitious recommendations and provide State resources to implement the full cost of the Kirwan Blueprint plan… the Maryland Constitution’s requirement of ‘thorough and efficient’ public schools properly places this duty onto the State…the Kirwan plan is a continuation of this State requirement.”
“Reliance on local funds for half, or more, of education funding merely promotes and extends the resource gaps that still plague Maryland’s schools…In the Kirwan Commission’s own research into ‘Fair Funding,’ the highest scoring state for equitable funding commits a much higher share of State funding than Maryland to achieve those goals…Taking into account current county funding commitments that have exceeded state standards, a plan that further increases reliance on mandated county funding can never accomplish the most equitable outcomes.”
Many reports have cited the leadership from Annapolis stating that they’ve pledged not to pass an across-the-board increase in the state’s income, sales or property taxes. Unfortunately, property and income tax are the only revenue sources a county has. It seems hypocritical that the State is not willing, nor do they think it appropriate to raise those taxes, yet the counties will be forced to raise exactly those taxes in order to pay for Kirwan, should MACo’s position not prevail (it won’t of course).
One of the goals of the Kirwan commission was to have more progressivity in the tax structure to provide better equity. Most will agree that property tax is one of the most regressive taxes out there. Even if you rent your home, you do pay property tax, because your landlord will absolutely be passing on this expense in your rent. More lower income people pay rent, so everyone pays and they pay at the same rate, no matter whether their house (owned or rented) is valued at $100,000 or $1,000,000. Ask most legislators in Annapolis and they will tell you it is a very regressive tax. So now, half of the cost of Kirwan, if it is to be borne by the counties, will have to be paid for by the second most regressive tax, property tax (next to the sales tax).
As I have written previously, 19 of 24 jurisdictions are either maxed out at 3.2% or above 3% in income tax, so that really only leaves property tax to pay for more than a $2.5 billion increase (Maintenance of Effort mandated increases + Kirwan). The percentage increases range from an average of 26% up to 76%. The statewide average property tax rate a county citizen pays is $1.19 per hundred of assessed value. For a $350,000 home, their bill is $4165. A 26% increase equals an additional 31 cents. That may not sound like much, but it adds another $1085 for a grand total of $5250.
Another big problem is the wealth formula, which only counts the assessable base plus net taxable income and divides it by the number of students in the system. It does not take into account any other factors in the jurisdiction, especially median household income. Many counties may appear “wealthy” by the States math, but when those counties have half of their kids on free and reduced meals (FARMS) and the median household income is far below the state average (Talbot’s is 20% below!), it proves the wealth formula is definitely NOT a one size fits all solution.
The ONE and ONLY public hearing is Monday, February 17th, beginning at 12:00 PM. It will be a joint committee hearing consisting of two Senate and two House committees, Appropriations; Ways & Means; Education, Health & Environmental Affairs; and Budget & Taxation. There are no plans for additional hearings, but ultimately it will be up to each committee chair to decide if future ones are needed.
Our legislative committee, still debated and took positions on 22 other important bills this week. No surprise but they were all overshadowed by Kirwan, the biggest and most expensive bill in Maryland history. It has had only 7 days of vetting and it is being fast tracked to a joint public hearing before people can truly understand its impact. Surely, this is a flawed legislative procedure and the citizens deserve better.
Laura Price is 2nd Vice President on the Executive Board of Directors of MACo, Chair of Budget and Tax, Talbot’s legislative liaison and member of the Talbot County Council.