Tax cap voting: Ask a different question, get a different answer

Friday, May 11th, 2012 at 10:19 am by

Next Tuesday, schools across the state will have their first experience with voters deciding whether to approve requested tax levy increases.

Up until this year, voters have been deciding whether to approve an authorized spending level for their school districts.

We will be looking to see if changing the question voters are asked to decide changes the outcomes and the turnout.

I imagine that many people think about elections as resembling giant board meetings, with more or less the same people showing up each time, sometimes voting one way, sometimes another.

But unlike board meetings, who turns out to vote can change dramatically from one election to the next.  That might be even more true in May school votes than November general elections.

The State Education Department has been compiling vote counts in school budget elections since 2003.  In the years since, total turnout has averaged just under 890,000 votes per year, with a low of 738,000 in 2009, and a high of 994,000 in 2005, a swing of almost 35 percent from low to high.

Here is a chart illustrating the change in yes and no votes and school budget passage rates between 2003 and 2011.

The chart shows that the “no” turnout has been especially volatile, ranging from a low of 261,000 in 2009 (the year in the period with the lowest statewide average proposed tax levy increase – 2.1 percent), to a high of 443,000 in 2005, a swing of 69 percent.

The range between the lowest and highest “yes” totals is much smaller — 28 percent, with a low of 462,000 in 2008 and a high of 591,500 in 2003.

Given that this year’s statewide average proposed tax increase of 2.2 percent approaches 2009’s low of 2.1 percent, we might anticipate a low turnout of negative voters, as occurred in 2009.

Here is a chart showing the statewide change in proposed school spending and tax levy and state aid over the same period as our voting statistics.

But it has occurred to us that the shift to tax cap voting could bring new voters to the polls – people who imagine that it means that for the first time they will have a chance to affect their school tax bills.

Voters could do so under the old rules as well, since permissible spending was capped if voters did not approve a school budget.  But the tax cap makes the connection more direct.

It is striking that the highest yes vote turnouts came in years when districts faced some of their toughest budgeting choices – in 2003, when state aid was cuts and districts asked voters to approve budgets with tax increases averaging 8.2 percent, and in 2010, when state aid was cut for the first time since 2003 and many districts proposed budgets with cuts to spending other than pensions and health insurance.

It seems that in the toughest financial times, voters determined that it was most important to support their school district budget proposals.

Of course, the tax cap does not only change the question voters are asked to decide – from authorizing a spending level to approving a tax levy increase.  It also changes the rules for the percentage of votes required for approval, and the consequences if voter approval is not forthcoming.

The tax cap law prescribes a complex set of calculations for establishing a “tax levy limit” for each district.  A short-hand explanation is that the tax levy limit is the lesser of 2 percent or inflation (2 percent for the coming year), plus or minus certain items such as the local share of capital costs, certain large legal expenses, increases in pension costs above a threshold, and a few other items.  These items vary from district to district.

If a district proposes a tax levy increase above its limit, approval by 60 percent of voters is required.

If the proposed tax levy increase is at or below the limit for the district, a simple majority of voters is enough for approval – 50 percent plus one vote.

Districts have two chances to win voter approval, with the opportunity for a second vote on the third Tuesday in June.

Of crucial importance, if a district cannot gain voter approval, it is not permitted any increase in tax levy over the prior year.

This year, 51 districts – only 8 percent of the total – are proposing increases above their tax levy limit and therefore will need approval by 60 percent of voters.

We cannot go back in time and calculate tax levy limits for each individual district for the last round of budget voting a year ago.  Also, as stressed above, had the rules been different a year ago, some voters would have responded differently to proposed budgets seeking higher tax increases.

But we can look at how many districts proposing larger tax increases a year ago were able to gain support from 60 percent or more of their voters.

This year, the average tax levy limit is 2.7 percent.  Last year, 90 percent of the 366 districts which proposed tax levy increases greater than that benchmark won voter approval for their budgets.  But only 61 percent passed with 6o percent of the vote or better.

High need small city and suburban districts had the hardest time reaching the 60 percent threshold last year.  Only 41 percent of those high need districts passed their budgets by that margin.

In contrast, 72 percent of the low need districts seeking tax increases greater than 2.7 percent were able to get approval by at least 60 percent of their voters.

It is also the case that if this year’s rules had been in place last year, districts would have made different choices – especially because of the severe penalty for failure to gain voter approval and the elevated risk of failure with coming from the super-majority requirement for cap over-rides.

The average proposed tax increase is down more than one percentage point from a year ago – from 3.4 percent to 2.2 percent.  There are multiple factors at work – state was cut last year and increased this year, for example.  But there is no doubt that the tax cap is a huge consideration, almost certainly the most important change from a year ago.

Among the pool of districts attempting over-rides this year, higher need districts are somewhat under-represented in comparison to their share of all districts.  That is not surprising, given their difficulty in getting to 60 percent a year ago.  But for this year at least, that under-representation is not striking.

Another concern is that the cap has been widely described as a “2 percent cap.”  Will voters apply that as a benchmark in evaluating their district’s proposal?

As explained above, allowable exemptions can result in districts having tax levy limits greater or less than 2 percent.  More than half the districts proposing budgets within their limit are seeking tax increases greater than 2 percent.  Their proposals will need only a simple majority of voters for approval.  But getting to that mark could be a challenge, if their voters apply 2 percent as the standard for judging what is a reasonable tax increase.

This entry was posted on Friday, May 11th, 2012 at 10:19 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.