Debate addresses pros and cons of Amendment A by David Lias In the view of Dr. Charles Wagner of Platte, Amendment A, if approved by South Dakota voters in November, will bring true tax reform to the state.
"Amendment A is about tax reform. It's not about cutting taxes or increasing taxes," he said. "It's simply to change the tax system."
Dr. Robert Mayer, superintendent of the Vermillion Public School District, admits that Wagner makes a good case for the need for tax reform in South Dakota.
"I'm thoroughly in agreement that we need tax reform in the state," he said. "Where I disagree is that Amendment A is not it, and it will not bring about tax reform, and it isn't about tax reform. It's about property tax relief."
Wagner and Mayer discussed the merits and disadvantages of the proposed constitutional amendment at a forum Tuesday night held on the campus of The University of South Dakota.
If the amendment is approved in November, it would change the wording of Article VIII, paragraph 15 of the state constitution by adding the phrase "Real property shall not be subject to taxation for school purposes."
According to Wagner and others in the state who support such a measure, such wording is needed to finally force the South Dakota Legislature to come up with needed changes in the state's tax structure.
Mayer noted, however, that the amendment could quite suddenly deprive public schools of $340 million dollars, which is about 50 to 60 percent of the total funds that school districts receive.
Amendment A, he noted, does not address how that lost revenue should be replaced. "If we're going to lose half of our funding in this state, it would be logical, I would think, to address the issue of replacement funds," Mayer said.
He added that he is confident that schools would be funded, even if the measure is approved. But the final result won't be tax reform. Amendment A supporters, he said, are for tax shifting, for bringing about property tax relief by shifting the tax onto someone else.
Wagner told the audience that Michigan is a good example to consider. In six months, that state made a major tax change to reduce its high dependency on property taxes for education.
He added that South Dakota could consider several ways to raise $340 million for education without taxing property, including a 6 percent corporate sales tax that would raise $80 million, a .2 percent stocks and bonds tax that would raise $50 million, an additional 1 percent sales tax to bring in $90 million, a 1 percent adjusted gross state income tax that would raise $110 million, and a real estate transfer tax to provide $35 million.
Mayer listed several reasons to oppose the amendment. The wording of the measure doesn't clearly state when it would take effect if approved, and there is no guarantee that the total revenue that would be lost to schools would be replaced.
The amendment also doesn't address bonded indebtedness used by school districts to fund building remodeling or construction, and it would bring about a loss of local control, he said, because school's funding would all come from the state rather than local sources.
Mayer argued that the measure would create a crisis situation, uses the welfare of children to force property tax relief, provides no opportunity for debate, quality research or compromise, and would pit higher education in competition for education funding from the state.
"The matter of a new tax should be formulated in the Legislature," Wagner said. "They have at their disposal the Legislative Research Council, they have the ability to get all of the valuable information they need."
Wagner said even if the amendment doesn't pass, there is no guarantee that the Legislature won't cut school funding.
Legal opinions state that bonded indebtedness would continue to be paid by property taxes, he said, adding that South Dakotans already have lost local control of their schools.
"The state sets what you will pay per student. The state sets what the mill levy will be on the property tax," he said. "The assessment is then taken in with that mill levy to determine how much property tax will be used to fund that school budget, and the difference is made up with state aid."
Wagner and other Amendment A supporters believe a new tax base could allow more control for local school districts by setting aside a separate revenue source to fund bond issues, capital outlay and extra curricular activities.