In yesterday's House hearing, the Treasury Inspector-General was asked if he could list which organizations had been targeted by the IRS for delayed approval or harassing questions. He replied that he could not make that...
- Appropriation by Litigation: Estimating the Cost of Judicial Mandat...
Appropriation by Litigation: Estimating the Cost of Judicial Mandates for State and Local Education Spending
Background Paper No. 55
When asked how he responded to charges that he raised taxes as governor of Arkansas, GOP presidential candidate Mike Huckabee partially shifted the blame to the Arkansas Supreme Court: "Do I apologize for complying with a Supreme Court order to improve education in a state that desperately needed it? Of course I don't, because our education system did improve."1 Huckabee was referring to his 2004 approval of an increase in several taxes to raise over $360 million for education spending in order to comply with the Arkansas Supreme Court's ruling in the case of Lake View v. Huckabee.2
In May 2006, Texas Governor Rick Perry responded to a similar court order by signing a series of bills to substantially reduce local property taxes and replace that local revenue by pouring billions of new state dollars into public education.3 The bills also made significant changes to the Texas tax system, including a new business tax applied to a company's gross receipts (called the "margins" tax) and an increase in the excise tax on cigarettes.
These changes—which will affect Arkansas's and Texas's long-term spending, tax burden, and business tax climate—are all part of a larger, and growing, trend. Since 1977 courts in 27 states have held that spending on schools is constitutionally inequitable or inadequate. These decisions often lead to dramatic short-term increases in education spending as lawmakers comply with court mandates. In nine states lawmakers raised taxes by over $13 billion to meet these new spending obligations. Similar cases are currently pending in other states.
Commentators have written many books, articles, and research papers concerning court involvement in the school finance controversy. But few studies have attempted a comprehensive, state-by-state measure of the long-term fiscal impact of court education mandates4 and none have presented a state-by-state estimate of the cost of legislation approved to comply with court education mandates.
How much more are states spending on education as a result of these mandates? Have lawmakers increased taxes to comply with the mandates, and if so, how much? Has compliance with court mandates led to long-term increases in per-pupil spending? This study—the first in a new series called Appropriation by Litigation—will answer these questions.
1. See Transcript, "Republican Presidential Debate in South Carolina", New York Times (5/15/2007), located at http://www.nytimes.com/2007/05/15/us/politics/16repubs-text.html?pagewanted=10&_r=1.
2. 91 S.W.3d 472 (2002).
3. See House Bills 1-5, 2006 Leg., Special Sess. (Tx. 2006).
4. A recent study by Christopher Berry did estimate the long-term impact of school finance judgments on state education spending. See "Christopher Berry, School Finance Judgments and State Fiscal Policy," in School Money Trials, at 213 (Brookings Institution Press 2007). Unlike this study, Berry did not present his findings on a state-by-state basis. Berry also estimated the long-term impact of court mandates on all education spending (federal, state and local), state spending, and local spending. The present study excludes federal spending.
As Congress moves closer to debating fundamental tax reform, the amount U.S. multinational firms pay in taxes on their foreign income has become a common topic for the press and among politicians. Some of the more sensational press stories and...
Professor Martin Feldstein of Harvard has called for limiting the tax savings from itemized deductions, tax-exempt municipal bond interest, and the tax-free status of employer-provided health insurance....