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Second, the state sales tax increased from four cents to six cents on the dollar. It was designed that the extra two cents would go to the school aid fund, which is the state budget for schools.
The last goal was to raise the state's lowest funded districts to receive a basic level of education funding, and in doing that, to close the gap between the highest and lowest funded districts. A new state education tax was created – six mills which is assessed on the state equalized value of all property. Non-homestead properties, which are businesses, rental properties and vacation properties, were now assessed an additional 18 mills to go to schools. When real estate is sold, a transfer tax of .075 percent on the sales price was created to add to the state school aid fund. Unlike previous property taxes, Proposal A capped by how much property tax can go up – at five percent or the rate of inflation, whichever is less.
"Pre-Proposal A, school funding was largely a local investment, and for homeowners, it was mostly as must pain as they were willing to bear," said Gary Naeyaert, executive director of Great Lakes Education Project (GLEP), a bi-partisan, non-profit advocacy organization supporting quality choices in public education supported by Michigan billionaire Dick DeVos. "K-12 education was 70 percent funded by locals, and 30 percent by the state, and in a state that has such a long history of home rule, that was considered logical and reasonable and normal for 150 years.
"Gov. Engler was not alone, but he led the charge on addressing this K-12 refunding, to get away from the heavy reliance on property taxes to fund education, when property taxes were going through the roof," Naeyaert stated. "It was very threatening for seniors who were living on fixed incomes, and younger people, who couldn't move into communities. It led to a seismic shift in how we funded education. Under the current scenario, local contributions are 20 percent, and the state contributions are 80 percent."
"Now, local districts have very limited control over their operational budgets. The state has full control. Locals can't go to the voters for more money for operations. They do have complete control over money for capital improvements, for facilities, funding for the use of technology and building improvements," said David Arsen, professor of educational administration at Michigan State University. "Michigan is one of the few states that does not provide for facilities. Proposal A left that out. But Proposal A shifted control from local communities and school districts to the state, and there have been new actors involved in making the decisions. It led to a decrease in property taxes, and an increase, from four percent to six percent, in the sales tax."...continued on page 3