With the general frustrations with government and our economy, it's understandable that folks can fly off the handle while considering Ohio's school funding situation. Recently I was criticized for not applying innovation on this important issue. North Carolina was pointed to as a better state on the school funding scene, especially when it comes to use of the property tax as a funding source.
So, let's have a look at North Carolina. It is a state that has a good reputation for having done many things right, especially its long-term commitment to growing its research triangle to bolster the state's economy.
I am no expert on North Carolina's tax structure or its method of funding schools, so I had to do some research to develop a sense for this.
First, I did discover that North Carolina is well below average amongst the state's in its use of the property tax as a means for funding schools. It appears, based an a quick test of residential property tax rates for areas roughly equivalent to our city school districts in Wayne County that the bill in North Carolina would be roughly half of what it is locally.
Looking a little further, I find that the lowest sales tax rate in North Carolina is 7.75% and in some areas it is 8 percent. That's substantially higher than in most areas of Ohio. If we were to add one percent or 1.5% to our rates, either at the state or county level, for the purpose of lowering our property taxes for funding schools that would contribute $1.3 to 2 Billion more that we could shave off the roughly $9 Billion now being paid in school property taxes. That would not be enough to lower property taxes into the range of North Carolina.
Third, let's look at the state income tax. North Carolina has an income tax with a rather flat rate structure -- more like Ohio's municipal income tax structure -- which no other state has. The beginning rate on the lowest incomes in North Caroline is six percent. Ohio's beginning rate is zero at the state level and one or two percent in many cities. North Carolina's top rate is 7.75% for individual income over $60,000. Ohio gets into that range at over $200,000 when the city income tax is also included. I seriously doubt that citizens would support raising income tax rates on lower and middle income families to achieve parity with North Carolina as a way to lower school property taxes.
So, how would the sales tax trade sound to citizens? I would expect that to get a mixed review.
In general, I would expect to find some support for lowering the property tax as long as the replacement is a tax that would be paid mostly by someone else. Also, the sales tax is usually seen as preferable to the property tax, so that would also be a factor, though only up to a reasonable rate level.
Clearly this is not the end of this discussion. There is the question of whether Ohio schools are spending in the right range. There is the question of funding resources for the lower wealth school districts compared to those with higher wealth. There are a whole set of questions about engagement of parents and the community in working with the schools to bring academic success -- not really a matter of funding.
My purpose here is not to recount the many changes that have been made in Ohio's school funding system over the years. Nor is it to describe what was enacted in the way of changes in July of 2009. These are important things that can add value to this discussion as it moves forward.
We should all be able to agree that it is well worth pursuing new ideas for improving Ohio's system of funding schools. As we look at these ideas, we do have to keep in mind that various citizens will have opposite perspectives, depending on what they see as the direction for "improving" the system.