SWEEPING EDUCATION BILL RAISES TAXING QUESTIONS

It may take months before all the implications of Missouri's sweeping education reform bill are realized. The General Assembly approved the legislation May 14, and it will take effect Aug. 28. But educators and state officials are still trying to sort out the impact of this complex and confusing bill.

Amid the tangled web of new rules and formulas, one thing remains clear. These improvements and school funding changes will be financed by what will turn out to be the largest tax increase in Missouri's history. Billed as a $310 million increase, it will end up costing taxpayers considerably more. The new formula will give districts $85 million more next year, but will grow to about $400 million in additional revenue when the formula is fully funded.

Many taxpayers will bear a double whammy: higher state income taxes and local property taxes. Those who own businesses will likely be walloped a third time. Nearly 300 of 538 districts must raise property taxes, which will generate an additional $38 million. Districts must raise their levies to $2 by 1993-94, and then increase to $2.75 by Sept. 1, 1994.

In many of districts, the increases can be voted by the school boards. Others must send the matter to voters. Schools that don't raise their levies face severe penalties, such as loss of state aid increases or even disbanding the district. The new formula is tax-rate driven, awarding those districts with the higher tax rates.

The bill also caps the deductibility of federal income taxes on state returns for individuals and corporations. On returns for individuals, the new limits for deductibility of federal income taxes are $5,000 for a single taxpayer and $10,000 for a married couple filing a joint return.

If federal income taxes are going up as proposed by the Clinton administration, then this partial loss of deductibility will have even greater consequences for Missouri taxpayers. This effect can be explained in the following manner: The result will be a squeeze from both ends, as federal taxes increase and the ability to soften that blow by deducting the federal bite from the state return is curtailed.

A series of statewide meetings between superintendents and state Department of Elementary and Secondary Education officials revealed the high level of uncertainty surrounding the bill. Neither superintendents nor state officials knew all the answers at a meeting in Cape Girardeau ... much less all the questions to ask in the first place.

Proposition C will be handled differently, but education officials can't explain the changes. This past week, some districts learned at the last minute that they needed to put their tax levy measures on the ballot. Some passed the deadline without even realizing it. Another glitch has surfaced involving districts who receive state-assessed utility and railroad taxes to pay for building projects. They might not be able to collect the money under the new law, and that could cost school districts $10 million statewide. We have to wonder what other surprises are in store from this 139-page law.

Ironically, the very 89 schools who challenged the foundation formula are now concerned with what they see as inequities in the new formula. On Friday, they decided to take their case to the Supreme Court in an effort to clarify matters. Unhappiness seems to grow as more superintendents learn about the full impact of the bill, especially the smaller and more rural districts. Scott County Central Superintendent Ray Shoaf, who was involved in the original lawsuit, feels the new formula does not achieve either equality or adequacy.

And the schools aren't the only ones with their doubts. Rep. Mel Hancock has said he is willing to go to court, if necessary, to challenge the validity of passing this tax increase without a vote of the people.

Despite the fact the legislature and governor have signed off on this new formula, serious questions remain. Missouri's future education funding may still rest with the courts.