In Conversation With…features an interview between a leader or figure involved in public education and a staff member of the Kentucky School Advocate.
This month’s conversation is with Shannon Stiglitz, KSBA’s director of Governmental Relations, who has attended each meeting held by Kentucky Gov. Steve Beshear’s Tax Reform Commission. She shares what potential changes this could mean for Kentucky schools and what items have been discussed.
Q. Why was the tax reform commission formed?
A. The Tax Reform Commission was formed by Gov. Beshear for several reasons. To really look at a long-term sustainable tax code that will ensure growth for the economy of Kentucky as well as ensure that we have enough funding to provide for state priorities such as education. They want to make sure that it’s a fair and equitable tax system.
Q. How many meetings have there been?
A. The commission started with several meetings in Frankfort to get the ball rolling to educate the members of the task force about the different issues that they’re facing. For example, many of them are not practitioners in the area, they’re not CPAs and many of them are not legislators, so their base of knowledge varied.
They had a couple of meetings in Frankfort prior to starting their meetings in each of Kentucky’s six congressional districts. After completing those (in August), they will return to Frankfort and their last meeting is scheduled for Nov. 8. Their report should be available at that time or in early December.
Q. What does this mean for education? Why is this so significant?
A. For education, it’s absolutely critical that we have sustainable, strong-growing funding in Kentucky in order to meet our goals. The legislature, the governor, all of us, are asking more of our students, but we can’t ask them to continue to do more and reach higher standards and go through more rigorous standards if we’re not going to provide them with the necessary resources to get there.
So for that reason, I think it is absolutely critical that the tax commission understand that there is a need in education, that our funding has been cut, that we dispel that myth out there that education has not been cut.
And I think while the tax commission says they will not look at reforming local taxes – for example, property taxes or adding local sales tax options— they have continuously received comments about those areas.
From KSBA’s perspective, we want to make sure that they provide adequate state funding for our children as well as continuing to allow us to have the same level of taxation at the local level that we currently have, if not more.
Q. Have you seen any themes emerge from those attending these meetings?
A. The definite theme out there has been the need for education, the need for health care services such as mental health, but also the theme of fairness and equity in the tax structure. Of course, that fairness and equity depends on your perspective. So for the realtor, the idea of taxing services on realty services is not fair and equitable, but for the low-income person, the idea of a sales tax on groceries is not fair and equitable.
I think you hear a lot of people use the term fair and equitable but without any clear consensus as to what that means.
Q. What changes do you think could come out of this?
A. I can’t predict what recommendations could come out of the commission. I think the least we can hope for is that the message that educational needs and the things our children need to be successful and college and career ready is getting out there. And there will at least be the fact that Kentuckians from all over the Commonwealth have been able to make their voices heard on the critical issue of our tax structure.
Q. Why did they take the issue of local taxes off the table? Is it too complicated or is it about the idea of local control?
A. Yes, it is too complicated in the sense that you have property owners who are afraid if you open the 4 percent issue, House Bill 44, that they would be taxed more at the local property level. You have the idea that local school boards think there’s this balance of state funding and local funding and not wanting the state to think, ‘Well, we can just allow them to tax more in light of not being able to give them more state revenue.’
And it’s complicated because it’s not just schools with taxing authority, it’s cities and counties, and you have things like restaurant taxes and local sales tax options. It adds another layer of complexity that the commission wanted to stay away from. And with the goal of maintaining state economic growth and sustaining state funding, it doesn’t really fit with the goals of the commission itself.
Q. Is there anything KSBA is advocating for in this process?
A. As I always tell the legislators, we’re not telling you how to build the road; we know where you want us to go and we know what it takes to get there we’re just asking you to provide those resources.
This is very important in the sense that we want to make sure that school board member voices are heard. To do that we sent a letter to all school board members and superintendents about the meetings, giving them some good talking points and really asking them to lay the information out from the perspective of their local district.
At every one of these meetings we have had a school board member present or to speak. I think they have definitely heard the voice of the local school board community.
While there certainly are things that we would be concerned about that would lower funding – for example, adding more exemptions, the idea that you could give more incentives to corporations could potentially lower state revenue sources. That would be a concern.
It is critically important for school boards that we look at other local revenue sources for school districts and here is the reason why: in some districts, their property tax revenue is never going to give them what they need, revenue-wise, to continue to be successful. So they may need other options locally.
The other big one that is critical is that it would be great if the tax commission, even though they are not looking at local property taxes, would realize that when local school districts need to build facilities and they have to do the nickel tax, they need to be automatically equalized by the state through a fair process, including the recall process currently in place. It would be great if we could have that equalized from the state and that would, of course, require state funding.
We’ll make sure school board members get copies of the report. I think it would be impossible for this tax commission to say they have not heard the voice of the education community and that we are in desperate need of more revenue.
From the standpoint of the state’s overall economy, local school boards should care about the tax system because it determines how you compete for jobs and are able to bring companies to their local communities, who can employ the students that they graduate. Good, high-paying jobs mean that you have local taxpayers and a good local property tax base. So local school boards have an interest from the revenue standpoint, in making sure we have revenue for education, and from the state economic standpoint so that we have good, strong communities with good jobs, good schools and good local tax bases.