Daniels vs. local construction spending

from Lesley Stedman Weidenbener in Sunday's C-J...

Indiana school officials are gearing up to fight a proposal by Gov. Mitch Daniels to require voter approval in a referendum for significant local construction projects. Daniels said the change is necessary to give voters a greater say in what he calls "the biggest driver of property tax increases." Last year, one-quarter of all property tax payments went to debt, of which 75 percent were for school obligations...Property taxes dedicated to debt are increasing 8 percent annually.

After the reassessments are done, local spending will probably be the number one factor in property tax increases.

But education officials worry that a referendum system will cause some voters to think only about their own pocketbooks while letting school buildings crumble around students.

"When you put a project on a referendum, it becomes real easy to defeat," said John Ellis, executive director of the Indiana Association of Public School Superintendents. "The question becomes only: Do you want to pay higher taxes? There's no way to discuss the merits of the project."

Huh? Is he saying that making the costs more obvious will make it more difficult to pass increases in funding? What's wrong with that? Why is it preferable to make the costs less obvious? I can understand why "education officials" might find this objectionable. But the objective outsider has to prefer more to less info.

The current system allows for "remonstrance"...

Currently, decisions about school and local government construction are left largely to school boards, city and county councils and other locally elected governing bodies. Taxpayers who oppose the projects can fight them through a process called remonstrance -- a petition drive in which the side with the most signatures wins.

The state also reviews property tax-backed projects. In the past, that review has been largely perfunctory but, under Daniels, the scrutiny has increased.

School officials say the current procedure works. Since 1995, opponents have forced 94 projects into a remonstrance. In 42 cases, the opponents won, stopping the project. In 52 cases, the school district won -- sometimes on a second try -- and was able to construct the project.

"Where the community and the taxpayers want to stop a project, they can," said Dennis Costerison, executive director of the Indiana Association of School Business Officials. "This idea that the public has no input and there is no one they can go to about a project is absolutely untrue."

But Kim Matthews, who organized opposition to a construction proposal by Greater Clark Schools, said the process is cumbersome and expensive for voters.

Although his group was ultimately successful in persuading the district to scale back its $165 million proposed bond issue to just $100 million, Matthews said he would have preferred putting the question directly to voters.

Remonstrance "is an awful system," said Matthews, who prefers eliminating property taxes entirely. "It takes money. It takes a lot of people's time. That's why the schools like the remonstrance system. They know it is more difficult for the people to win."

That was a good discussion of the pros and cons of the remonstrance system. Not that this solves much, but out of curiosity, how does Indiana's system compare to those in other states?

Indiana's remonstrance process is unique among states. Most require a referendum to approve school construction, said Judy Marks, associate director of the National Clearinghouse for Educational Facilities.

But the process can vary. In some states, approval requires as much as a 60 percent majority. In others, it's a simple majority. In some places, almost all projects are put on the ballot, Marks said. In others, only the most expensive require approval.

Results of the votes are mixed. According to American School & University, a construction industry publication, about two-thirds of the nation's school construction referendums passed last year. But in some states, the results were much lower. In New Jersey, just 43 percent of all school construction referendums passed last year. That's the lowest success rate in at least a decade.

Many states that require referendums for construction have been forced to step in to help schools. In Ohio, where such votes are required for all property tax increases, many fail. That has left schools without the ability to refurbish existing buildings or construct new ones and led courts to order state spending on the problem. Now, the state is spending $5 billion -- some of it backed by its tobacco settlement dollars -- on school construction.

OK, how does this align with how Governor Daniels wants local govt spending to interact with the state govt?

Daniels is not proposing to put any state funding into school construction. Rather, the administration is pushing for just the opposite -- less money spent on buildings. He is enforcing new limits on the cost of construction and has issued guidelines for school buildings.

According to his office, before 2005 Indiana's school construction projects were 27 percent larger, cost 15 percent more per square foot and resulted in construction costs 46 percent above the U.S. average. Since then, though, school projects have generally been scaled back. And earlier this year, the General Assembly created a new county board that beginning in 2009 will review construction projects before bonds can be issued.

Under Daniels, this system would result in less spending. But under future governors who prefer looser "purse strings", it's not clear how it would impact spending (as in other states).