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Education Experts: Referenda May Be At Odds With Tax Cap Measure

Two extra measures will appear on Monroe County voters' November ballots-one capping property taxes permanently at a fixed rate by adding the requirement to the state constitution and the other giving citizens the ability to voluntarily bump their taxes up beyond the constitutionally set ceiling.

It's a sticky subject. Statehouse legislators have made a play to add the 1, 2, 3-percent property tax caps, which are already part of state legislation, to be included in the state's constitution, making them, for all intents and purposes, a permanent measure. Voters will need to pass a referendum to make it happen. Meanwhile Hoosier schools' budgets are on their last legs in part because of the decreased funding they've received since caps have kept property taxes down. This means there's been less money to go around. Monroe County's school district is one of many trying to solve the problem by asking for more money stemming from higher property taxes. But they'll only get that money if residents vote to increase their own taxes through a referendum. And this November both issues will be on the ballot. But what Department of Local Government Finance Spokeswoman Amanda Stanley said many residents don't understand is there's no reason a citizen can't vote for both.

"For example you have a hundred thousand dollar homestead property, so its capped at 1%," she said. "So the maximum that that taxpayer can expect to pay is 1-thousand dollars. However, if within their taxing district a unit has proposed a referendum project, or if it's a school a referendum tax levy and the majority of the voters have passed that project or tax levy then their cap amount will be adjusted based on the rate that has passed."

So if a referendum from a local agency -- like the school's for example -- passes, property taxes can then be bumped up above the capped levels, essentially giving those local entities a method for routing around what could soon become a constitutional rule-a practice Monroe County Community School Corporation Superintendent J.T. Coopman predicts will be the norm.

"That's pretty much the way they do business in Ohio and Michigan and so that's pretty much an annual case that they put a ballot question up for the public," Coopman said.

And Coopman's not alone in his assumption. Terry Spradlin, who co-authored the Center for Evaluation and Education Policy study of recent school referendums in the Hoosier State, says referenda are continually more frequent and he doesn't think their growing numbers will slow anytime soon.

"It's really going to be four fiscal years from now before there's even the possibility that the state will increase funding for them," Spradlin said. "So the only new way of generating revenue are referenda. So the answer seems all evidence suggests that yes, this is going to be a regular process for school districts and communities to pursue."

And if that's true, it could mean more communities will be using the referendum work around  to increase taxes despite the law. Which begs the question wouldn't cementing the tax caps permanently into the state's constitution in some way make the caps less valid? Spradlin said it's possible.

"What is the purpose of the caps? Why did we make this change and then pass the burden of doing this extra procedure, place that upon the school districts' shoulders? So, something we definitely need to keep an eye on, so yes it is a concern."

Once the caps are included as part of the state constitution they'll require a multi-year process ending with a new constitutional amendment to ever be reversed. That meansa repeal is significantly less likely and  the probability that more schools will seek referendums would increase.  Bedford State Representative Eric Koch says that's okay with him. He says school funding referenda don't take support away from the property tax caps, but instead give the public more control.

"I'm not afraid of the voters," Koch said. "I trust the voters and the referenda are an opportunity for the voters to directly give their approval or disapproval to additional spending. I particularly trust the voters who are making decisions that directly impact them their families and their communities."

Koch said he thinks voters will only pass referenda in the communities where they're really needed. That's the opposite of what  Spradlin and Coopman think. Spradlin said he worries turning the Hoosier state into a referendum state will result in a funding inequality among counties separating school districts by the "haves" and "have nots".

"Should some communities struggle to pass a referendum and others easily pass them we will have widening disparities in school funding where districts have the ability to pass them because they have staff that can help wage the campaign successfully," Spradlin said.

Spradlin cites his study on recent referenda in the state as proof that's already happening.

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