IS 1982'S PROP C DEAL A DEAD LETTER AFTER SENATE BILL 380?

Remember back in 1982, when we Missourians voted on something called Proposition C,? Kind of hazy on it?

Time for a refresher.

In the early 1980s, it was widely publicized that Missouri was heading for statewide property tax reassessment. In due course (1985) this reassessment did occur, with valuations going skyward in most, if not all, cases.

Far-sighted Missouri education leaders, realizing their sector is dependent on property tax revenue, wisely got out front of the volatile matter of sharply higher property taxes. They proposed a deal to Missourians called Proposition C. Sold in a statewide campaign in the fall of 1982, the deal went like this:

Voters were asked to pass a one-cent, statewide sales tax (Prop C) solely for education. In return for that money, there would be a rollback of property tax levies across the state (the amount of the rollback varied from district to local district). The sales tax would generate $400 million in revenue at first (with normal economic growth in the years since, it's much higher now).

It was simple: Voters agreed to a statewide sales tax, which would be paid by everyone, in return for property tax relief. A potential crisis in school funding was averted. Property taxpayers might have grumbled about the higher valuations (except when it came time to sell that ground!), but the tax impact was softened.

Voters approved Proposition C following a campaign that emphasized it was good for education, good for property taxpayers, good for business and good for the state of Missouri. It was not very controversial, and probably not very many Missourians even paid it that much attention. So far, so good.

Then, this year, the Missouri General Assembly passed Senate Bill 380, the first revision of the school foundation formula in 16 years. The big, largely untold story of SB 380 is that it effectively repeals the deal voters understood themselves to be getting when they bought Proposition C a decade ago.

How? By eliminating the Prop C rollback of property tax levies in about 291 local districts and, in most cases, doing so without a vote of the people. Schools will be going to significantly higher levies and keeping the Prop C money.

You see, SB 380 mandates a minimum local levy of $2.75. Any district that had a levy of $2.75 before the Prop C rollback can return to the levy authorized before Prop C by action of the school board without a public vote. Districts that didn't have a $2.75 levy before the Prop C rollback will, in most cases, hold an election asking voters to approve that higher levy. Districts whose voters or school boards refuse to increase the levy will, by the 1996-97 school year, face dissolution i.e., consolidation with another district or districts.

Cape Girardeau's property tax levy is above $2.75 even after the Prop C rollback, as are Jackson's and Oak Ridge's. But most school districts in southern Missouri are well below that figure.

It's worth noting that until last year, Missouri's minimum property tax levy was just $1.25. It was only last year that the state mandated a minimum local levy of $2.00. Many local districts, especially in southern Missouri between here and Springfield, have not yet raised their levies to that $2.00 state minimum enacted just last year. Now they must go much higher, or face either consolidation or opting out of the system by which state aid is distributed.

In fact, the bill as originally drafted proposed a $3.00 minimum levy. Only the determined opposition of some of us in floor debate got it reduced to $2.75.

This mandated repeal of the deal voters bought when they approved Prop C has been the big unmentioned factor in SB 380. I believe it is explosive, and that when voters find out, they're going to be demanding explanations from some very nervous politicians.

The first tax bills to contain the higher levies will be mailed in October 1994, approximately 30 days before the November general election. Half the Missouri Senate and every member of the House of Representatives will be facing the voters that fall.

In Thursday's edition:

Key parts of SB 380.