Amidst Widespread Budget Shortfalls, States Consider Tax Increases and Spending Cuts

On December 4, 2002, South Carolina State Representatives Rick Quinn (R-Richland) and James Smith (D-Richland) presented a plan to use money from sales taxes, not property taxes, to pay for education. Although Quinn, the state House majority leader, and Smith, who will probably become the minority leader, are speaking informally, their proposal seems headed to the state Legislature in the next session. The plan calls for eliminating state tax exemptions for electricity, fuel, and out of state sales and distributing the up to $1 billion in increased revenue to the state's public schools. The allotments would be for $7,000 per pupil in every school.

The plan reflects the legal and economic situation in South Carolina. In May of 2003, a South Carolina trial court will hear Abbeville County School District v. State, 515 S.E.2d 535, a school-finance suit brought by 36 low-wealth districts. Paul Krohne, the director of the South Carolina School Boards Association, which has played an integral role in the case, said that he expects more funding plans to be proposed as the trial date approaches. Meanwhile, South Carolina, along with almost every state in the Union, is facing a budget shortfall and is looking for more ways to generate revenue.

As budget shortfalls worsen across the country, moreover, education experts anticipate that other states will consider alternatives to the property tax. California, which also has a school-funding lawsuit, Williams v. State, faces $2 billion in education cuts and determined protests from unions, parents, and other advocates. In Oklahoma, educators urged Governor Frank Keating to call a special legislative session to address their "ideas" for school funding. New Jersey Governor James McGreevey announced in November that he would freeze state aid "in several areas" in order to provide more money for schools. A new source of funding, some advocates say, is the only way to forestall a nationwide education crisis.

Prepared December 6, 2002