Wow. That was quite a ride. The state legislature's "lame duck" session ended early Friday morning, with final passage of the complex road funding compromise legislation coming at 5:30am after many hours of frantic negotiation and maneuvering. The road funding package includes some measures which will give meaningful help to public schools, including a net $500 million in new money available for K-12.
Even more important is the list of school-related legislation which did not pass; these measures will have to be reintroduced in the next session to move forward. Teacher and administrator evaluation, A-F school rating, 3rd grade flunking, EAA expansion, and the deficit "early warning" package all failed to become law.
These are really significant victories, and you helped to make them happen! Continuing pressure from parents and other concerned citizens kept a whole basket of awful bills from becoming law and helped create the chance for schools to benefit from, instead of be damaged by, a road funding solution.
Aside from fixing the roads, how does yesterday's major compromise affect public schools? The essence of the road funding provision is that fuel will be exempt from the sales tax, but fuel taxes (which are earmarked for transportation expenses) will be altered and increased to take the place of the missing sales tax. So while new money - about $1.2 billion per year - will be available for roads, sales tax collections will be much smaller. The sales tax is the largest source of funds for the School Aid Fund, and also supports the general state budget and money directed to cities and towns.
The compromise worked out this week was to ask the voters of Michigan to approve a constitutional amendment which would increase the state sales tax by one percentage point. It would also, for the first time, give schools a set share of the use tax levied on certain services. Finally, the amendment would restrict the uses of the School Aid Fund to K-12 education and community colleges, thus reversing the current diversion of funds to higher education.
While exempting fuel from the sales tax would cut $551 million from the SAF per year, the increased sales and use taxes would bring in an additional $807 million. Combined with the $44 million from the new tax on some internet sales, this means a net increase of $300 million to the school aid fund. With the diversion to higher ed now prohibited, that would restore some $200 million to K-12, meaning that K-12 revenue would increase by $500 million per year. This does not make up for the cuts from 2011, but it does get us part way there. (For more information on the compromise bills and their revenue impact, see the House Fiscal Agency analysis of the compromise package.)
To make up for the fact that an increase in the sales tax hits low-income families harder than others, another provision will restore funding to the state Earned Income Tax Credit - bringing it back up to the levels before the 2011 tax cuts.
Finally, the compromise included one more surprise: a repurposed bill which will authorize a study to determine the true cost of educating a child in Michigan. This is a measure which Michigan parents have advocated for years, and was proposed by a bill introduced earlier this year. So far, our state has been talking about school funding in a vacuum, and this study would give us a chance to systematically measure what different school services cost. That would help us hammer out a sensible system for funding K-12 education that was geared at giving schools the resources they need.
Was this an exemplary model of democratic governance? Not exactly. But, as humans, we have a tendency to put things off to the last minute, and the pressure of a deadline can help encourage compromise. This road funding package is far from perfect, but it may indicate the start of a trend - one where our lawmakers tone down the political posturing and start paying greater attention to the will of the people.