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Education Sales Tax Used In Other States

Oklahoma Watch is a nonprofit organization that produces in-depth and investigative journalism on important public-policy issues facing the state. More Oklahoma Watch content can be found at www.oklahomawatch.org.
Oklahoma Watch
Oklahoma Watch is a nonprofit organization that produces in-depth and investigative journalism on important public-policy issues facing the state.

Several states have proposed or approved sales tax increases to support education similar to a proposal in the works in Oklahoma, and the results have varied.

In some cases, the sales tax hikes have remained in place for years, expanding or preserving education spending. In another case, a tax hike was repealed by voters, and a second tax ran into legal trouble.

Iowa, Arizona, Idaho, Florida and Georgia are among the states that implemented sales tax increases similar to the one proposed by University of Oklahoma President David Boren.

That plan, which would go to voters in 2016, would increase Oklahoma’s sales tax by one penny on the dollar and could raise more than $600 million. Most of that would be used to give raises to teachers.

Sioux City Public Schools in Iowa became the first district in the Hawkeye State to push for a countywide, voter-approved penny sales tax in 1998. That money was used to pay for the construction of new schools.

Brad Hudson, a government relations specialist for the Iowa State Education Association, said all but three of Iowa’s 99 counties adopted the sales tax by 2005. The Legislature then voted to implement the tax statewide.

More than $1 billion in funding has gone to rebuilding or upgrading Iowa’s schools, Hudson said.

“The need for a vote of the people was clear for something like this to occur,” Hudson said. “By 2005, most of the counties passed it, so the citizens clearly supported it.”

The tax will need to be renewed by the end of this decade, which Hudson expects to happen.

The main question is whether the state will expand how the money can be spent.

“It’s done a lot of good across the state of Iowa for improving schools,” Hudson said. “The discussion is changing to, 'Does this entire amount need to go toward infrastructure, or should some of it go to operational costs or programs for low-income students?'”

Oklahoma House Minority Leader Scott Inman, D-Del City, said while he supports Boren’s proposal, one of the major concerns of such a tax hike is that the Legislature would use the money to supplant existing education funding.

"It has to protect against opening the back door and funneling money out of public education as this new money comes in,” Inman said. “If these new monies were to pass, it would have to be above and beyond what we already give.”

That was a concern raised by critics in Arizona after voters approved a sales tax increase in 2010 that was used to protect core services like education during the recession. Despite the new revenue, by the time the tax expired at the end of 2013, Arizona had still made some of the deepest cuts in state education funding in the nation.

A push to renew the tax failed overwhelmingly, with 65 percent voting against the proposition.

Arizona also passed a 0.6 cent sales tax increase in 2000 to support education. That tax expires in 2021. About 20 percent of that revenue is used to fund base salaries, and another 40 percent is used for performance pay for teachers. The rest goes to the districts.

That tax also has not been without controversy.

In July 2014, a state judge ruled that Arizona violated a section of the voter-approved law, which stipulates lawmakers must adjust school funding for inflation. The judge found the state failed to do that between 2009 and 2014.

That decision has been appealed.

Other sales tax proposals have been less controversial.

In Idaho, the Legislature passed a 1-cent tax hike that was tied to a reduction in property taxes in 2006.

Paul Headlee, deputy manager of the budget and policy division for the state’s Legislative Services Office, said that revenue was not specifically earmarked for education, though that’s where most of the funds went.

Headlee said the sales tax raised $210 million in 2007, but still left education short $40 million due to the loss of property tax revenue. The state covered the $40 million loss and then added another $265 million for education.

“Our property taxes were skyrocketing at the time,” Hudson said. “It was a sales tax increase for property tax relief.”

Florida’s school system is set up so that each school district is countywide, and each county can vote on implementing its own education sales tax.

In Orange County, which includes Orlando, voters first passed a half-cent sales tax in 2002, and that was given a 10-year extension in 2014. The money is used for school construction and renovations.

Not all pushes have been successful.

The Georgia Association of Educators has pushed for a statewide half-cent sales tax increase, but the proposal has found little support in the Legislature.

That would be on top of a provision that already allows individual districts to ask voters to approve a 1-cent sales tax increase.

Oklahoma Watch is a non-profit organization that produces in-depth and investigative journalism on important public-policy issues facing the state. Oklahoma Watch is non-partisan and strives to be balanced, fair, accurate and comprehensive. The reporting project collaborates on occasion with other news outlets. Topics of particular interest include poverty, education, health care, the young and the old, and the disadvantaged.
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