The Drake report was published this week. It asserts that the State of Michigan is cutting taxes to such an extent that we are “on the road to economic mediocrity” as one headline put it. The lead snippet from the report states:
Michigan has slashed taxes over the last 20 years: Beginning with 1994’s Proposal A, tax cuts have reduced state and local revenues in Michigan by $51.1 billion; an estimated $38.3 billion of that would have gone to K-12 education.
The report, commissioned by a variety of public education stakeholders such as the American Federation of Teachers, Michigan Association of School Boards, and the Michigan School Business Officials, seems to be making a case that school funding needs to increase and that our favorable tax climate proves we have capacity to do so.
Should that $38.3 billion gone to K-12 spending at a time (from 1994 to 2013) when Michigan’s average per capita income ranking among states dropped from 17th to 35th?
If we were only comparing Michigan with itself, then maybe there is merit.
But how does Michigan compare with other states when it comes to K-12 spending today in light of the reductions referenced by this article?
Here is where Michigan ranks against other states in key education spending categories as reported by the National Education Association:
- 9th in per capita education spending
- 3rd in K-12 spending per $1,000 of personal income
- 4th in state and local education spending as a percentage of all government expenditures
- 10th in average teacher salaries
- 14th in K-12 spending per pupil
Given the state’s 35th ranking in per capita income, the data shows that K-12 spending in the state compares favorably to other states and in comparison to our own means. The reductions referenced in the Drake Report are better explained as the tax policy reflecting the massive loss of revenue experienced by the state during the Lost Decade.
The unpleasantness experienced by the group who commissioned this study has more to do with how the total expenditure is allocated, particularly as the state address massively underfunded pension and retiree healthcare funds.
Proposal A is maligned now, but it wasn’t so much as Michigan’s economy grew, leading to rising property values, more jobs, higher wages, and ultimately higher tax revenue. No tax revenue system fares very well when an economy contracts.
We now appear to be on the other side of Michigan’s darkest economic days. As there is capacity for tax increases, we can see a better case to address Michigan’s failing road system. The numbers, however, don’t make a great case for increased K-12 taxes.