It’s fitting that the Democratic reversal on school funding occurred on the eve of the Mayweather-McGregor bout.
In a lot of ways, the state Dems’ endorsement of scholarships for private schools reminds me of Conor McGregor: lots of talk before the fight and not much resistance once it got going.
On August 28, 36 Democratic legislators in the Democrat-controlled house supported the private school scholarship subsidy, enabling the measure to pass by three votes. The senate’s expected to pass the measure today with heavy Democratic support.
The scholarship subsidy contradicts pretty much everything the Democrats supposedly believe in when it comes to education finances.
For the last few years, almost every Democrat in the state—especially the ones running for governor—has called for more progressivity in school funding, generally in the form of a progressive income tax, as opposed to the current flat tax.
In other words, the state would raise more tax dollars by increasing the rate that the wealthiest citizens must pay. Then the revenue would be fairly distributed so that poorer school districts would get more aid. Presumably this would help break the dependency of schools on property taxes, which favor wealthy communities over poor ones.
But last week, house speaker Michael Madigan and senate president John Cullerton threw progressivity out of the window, signing on to a deal that gives a tax break to the rich, alienates their teachers’ union allies, and takes money away from public schools.
This latest struggle began a few weeks ago, when Governor Bruce Rauner vetoed the school funding bill known as SB1. It was part of his larger plan to coerce Democrats into signing on to his anti-union legislative agenda—you know, kill the unions or the schools go bankrupt.
The senate overrode Rauner’s veto and the house was heading for its own veto override vote. That’s when Madigan and Cullerton cut their deal with Rauner. It largely keeps SB1 intact but adds what alderman Scott Waguespack calls a “poison pill”—the private school scholarship tax credit.
As I write this, it’s unclear what’s in the fine print, but the tax credits would amount to about $75 million a year for the next five years, or $375 million total.
If an individual donates $100,000 to a private or parochial school’s scholarship fund, that person would get $75,000 in tax credits. Tax credits come right off the amount paid in state income taxes. So, say, a Republican billionaire named Bruce owes $100,000 in state taxes. With $100,000 in tax credits, he’d pay zero dollars to the state.
This option is open to anyone. But let’s face it: only people who owe a lot of money to the state, like Bruce the billionaire, would be tempted (or even able) to take advantage of it.
Proponents say it’s all about giving low-income kids school choice, so they don’t have to attend the chronically broke neighborhood schools. That’s great for a student who gets a scholarship to a private school. But let’s say a student gets “encouraged” to leave because his test scores are dragging down the total (as has been known to happen in charters or private schools). He’ll wind up at that chronically broke local public school, which will even have less money to spend thanks to the millions siphoned off by the scholarship tax credits.
The scholarship fund gives the rich incentive to divert their money away from government. Thus, the state has less money to cover everything from road repairs to education.
The scheme fits right in with the strategy of anti-government Republican ideologues, who argue that the best way to kill government is to starve it. Or as such an ideologue, Grover Norquist, the founder and president of Americans for Tax Reform, once put it: “I’m not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub.”
In particular, there’s less money for unionized public schools and more money for nonunion private ones. So the plan is a blow to the teachers’ union and the Democratic Party the unions love.
Now you can see why so many Republicans—chief among them Education Secretary Betsy DeVos—are fond of these scholarship tax credits. You didn’t really think it was because of the kids, did you?
Democrats’ stated reasons for signing on to the deal vary. In the case of Madigan and Cullerton, it’s obviously a gift to Archbishop Blase Cupich, head of the Archdiocese of Chicago.
Mayor Rahm Emanuel’s got hundreds of millions of reasons. As a part of the agreement, the Chicago Public Schools gets the hundreds of millions of dollars it needs to pay its most immediate teacher pension obligations. The state deal also lifts the cap on property taxes, which means that Rahm will be able to raise the tax rate to fetch more money for the schools.
And that brings us to the tax increment financing program, the ultimate destination in any story regarding Chicago and taxes. The TIF is in effect a surcharge that gets slapped on your property tax bill. You think it’s going to the schools and parks, but in reality it gets diverted to the mayor’s slush fund.
Rauner briefly talked about essentially subtracting a portion of the city’s annual TIF collection from the amount of school aid the state sends to Chicago. But he backed off that idea. So Rahm gets to keep his TIF slush and get state school aid. Plus, by raising the tax rate for schools, the mayor generates more slush for his TIFs. The bottom line, Chicago: prepare to pay more in property taxes.
When the deal passed the house, Madigan hailed it as a great “compromise.” But to some of us, it smells like betrayal. v