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Indiana property tax law undergoes a sea change effective today. But for all the changes incorporated in House Enrolled Act 1001 – including the process for approving school construction projections – local property taxes remain the only option school districts have for building schools or making major repairs to older buildings.
And with the changes in the approval process comes the likelihood of a growing disparity between school districts in fast-growing suburban communities and those in rural and urban areas. It is incumbent on lawmakers, who created the conditions likely to fuel the disparity, to monitor the school construction environment and begin to consider ways to assist needy districts. To ignore the disparity is to risk long and costly court battles over inequitable learning conditions.
Without doubt, controlling school construction debt was a goal of the massive property tax package approved in March. Statewide, the fastest-growing expense for property tax-supported budgets between 2000 and 2006 was school debt service, the repayment of principal and interest on bonds sold to pay for building projects.
Those decisions were largely made by the taxpayers within the school districts, but lawmakers catching heat for property tax increases quickly realized that tightening construction controls would be the best way to control debt. They established new rules for capital projects, requiring a voter referendum for K-8 schools costing more than $10 million, for high schools costing more than $20 million and for all other public projects costing more than $12 million or at least 1 percent of the taxing units’ assessed value.
The new rules would have required Whitley County Consolidated Schools, now seeking approval for a $59.6 million bond issue to build a new high school, to win approval from voters at the ballot box instead of in a remonstrance petition drive. Superintendent Laura Huffman said opponents of the project have suggested the district should wait until its existing debt obligations are paid off in about 12 years, but she said the 60-year-old school has “served its usefulness” and financial projections showed that putting the work off would ultimately cost taxpayers more.
Huffman said the petition drive, which ends July 7, has been a positive experience for the conversation it has inspired in the community. She said she respects the position of project opponents, provided their opposition is based on fact.
How a school referendum process will affect community discussion over school projects remains to be seen. Opponents will always have the more attractive case: Vote no to keep your taxes down. A petition process requires voters to publicly state their position, while a referendum allows someone to profess support and privately vote no.
But schools will be built. In fast-growing suburban areas, where young families move seeking shiny new buildings and higher test scores, schools quickly become overcrowded. School districts in those communities are likely to succeed in a referendum vote because the residents have direct ties to the schools, know the building needs and recognize that strong and attractive schools are in the community’s best interests.
The real threat is to other school districts – in cities and rural communities where voters are less likely to have a connection to schools and where the total tax burden makes support of any property tax increase unpalatable. In those cases, projects will be defeated and buildings will deteriorate – pushing families who can afford to move to the suburban districts, where enrollment increases will require more school construction. Those families who can’t afford to move will be left behind in crumbling schools, setting up the inevitable legal showdown.
Shortsighted legislators will ignore the consequences; conscientious legislators will begin now to even the school construction playing field.
