A New Strategy for Property Tax Relief

Published November 1, 1997

Another year has passed without reform of the state’s system of financing schools. Republicans once again stopped a “tax swap” plan to lower property taxes by raising the state income tax, this time despite sponsorship of the plan by Governor Edgar. Farmers and others hard-pressed by property taxes should be asking themselves: Is it time to pursue a different strategy?

In the past, the Illinois Farm Bureau has endorsed plans that promised to lower property taxes in exchange for higher state income taxes. Taxpayer groups oppose those plans because overall tax burden would rise. Republicans in the collar counties, whose incomes are above the statewide average, oppose higher income taxes on the grounds that they already send far more money to Springfield than they get back in state aid for public services.

The case for property tax relief hasn’t been made an easier sell by combining it with calls for higher spending on education. Indeed, that strategy may be making property tax relief more difficult to sell. Opinion polls reveal that most people give public schools low grades and few believe that more money would necessarily mean better schools.

A successful strategy for property tax relief requires separating it from proposals to raise overall taxes or income taxes. For example, we could propose a seven-year freeze on per-pupil property tax levies without identifying any new revenue sources, so long as schools and local governments are allowed to increase their spending by no more than the “natural” growth in federal and state revenues.

Competition could play a major role in making this possible. Teachers and administrators working in today’s public schools are largely insulated from the consequences of failure and denied the rewards of success. Consequently, opportunities to save money or to do a better job within the current budget are not pursued.

A healthy competition among schools would begin if parents were allowed to choose the schools their children attend, and if public funding “followed the student” to the schools that did the best job. When the public funds are given to parents rather than directly to schools, and when private as well as public schools are allowed to participate, this approach is generally called “school choice” or “vouchers.”

School choice plans can be written to address any objections raised by apologists for the public schools. For example, the amount of the voucher can be set low relative to current spending levels to ensure that the program saves money from the start. It can be phased in by one or two grade levels each year to ensure a smooth transition. Legislation can protect participating schools (public as well as private) from costly mandates and regulations.

Needy children could receive additional supplemental scholarships containing their share of Chapter 1 monies. Schools that teach the hatred or inferiority of any person or group on the basis of race, ethnicity, or other group characteristics could be prohibited from participating in the program. Each community could decide the value of the vouchers to be issued to parents within its taxing jurisdiction, just as school boards now determine how much is spent each year.

Is school choice too “radical” for Illinois? For heaven’s sake, Bob Dole made school vouchers a major part of his campaign for President just last year. If vouchers aren’t too radical for Bob Dole, why are they too radical for Illinois?

School choice is breaking out all around us. Minnesota and Arizona adopted major tuition tax credit plans this year, and a $500 tax credit plan (HB 999) passed the Illinois House early this year and is still under consideration in the Senate. Nearly 1,000 charter schools are operating across the country with 200,000 enrolled students. Pilot choice programs are operating successfully in Milwaukee and Cleveland.

Farmers who are serious about getting property tax relief need to take a closer look at school choice. Only if public schools become more efficient will there be less pressure for tax increases, and greater opportunities for significant and lasting property tax relief. School choice is the most promising strategy to reach that goal.

Joseph L. Bast is president of The Heartland Institute, a nonprofit research organization based in Chicago, Illinois. Model legislation showing how a statewide choice plan could lower property taxes in Illinois is available from Heartland.