News Story

Media Promotes False Narrative that Schools Will Lose Money on Roads Package

Schools projected to gain billions

The statewide news outlet MLive is continuing to present an inaccurate narrative about a House-passed road funding package, perpetuating an assertion that public schools will lose money if the bills become law, according to a Mackinac Center for Public Policy expert.

MLive is hosting a database that purports to show the “funding decrease per year” for each school district under the House package. While its origin is unclear, other press reports suggest the database was created by the Michigan League for Public Policy, a welfare advocacy organization formerly known as the Michigan League for Human Services. The database is also being promoted by the Michigan Association of School Boards, which gets funding from public school districts and has been outspoken in its opposition to the House proposal.

Although the methodology used to produce the database is not disclosed, it appears to simply multiply each school district's total enrollment by $475. That comes from a House Fiscal Agency estimate of the amount of sales tax revenue that would no longer be automatically earmarked to school spending if fuel sales are exempted from sales tax. That's a key element of the House proposal. Under current law none of the revenue from Michigan’s 6 percent sales tax goes to roads.

The proposed sales tax shift would be accompanied by an increase in fuel taxes, resulting in about $1 billion more for roads each year and no net tax increase.

The revenue shift would not “cut” the overall amount of state tax revenue explicitly earmarked to schools. Instead, other school tax revenue is projected to increase by $2.5 billion annually over the six-year period during which the House changes would be phased-in – even with the sales tax shift. The supposed “cuts” to education are pure fantasy, said James Hohman, the assistant director of fiscal policy for the Mackinac Center.

Hohman said that speculation is contradicted by “fail safe” language in the House-passed bills that explicitly prohibits any school funding cuts. The bills require the Legislature to appropriate at least as much as it did the previous year for schools, and if it does not then the full sales tax would be immediately re-imposed on fuel sales, and the gas tax would also revert to its current level.

Marjory Raymer, director of news for MLive Media Group, forwarded a link to the database in response to an email seeking comment and said the news site would have no further comment.

“These are complex policy matters but MLive seems intent on scaring readers about school funding cuts,” Hohman said.

Hohman performed the analysis that projects how much revenue earmarked for school funding will increase with and without the changes proposed by the House bills. It is based on a school funding growth rate of 2.8 percent that is projected in a shorter-term consensus estimate produced by the legislative fiscal agencies and the Department of Treasury. When that rate is applied over the tax-shift phase-in period, it shows total revenue earmarked to schools rising from $11.5 billion currently to $14.0 billion in 2023 with the House plan, and $14.9 billion without it.

Nothing prohibits future legislatures from using other state tax revenue to increase annual school spending, which recent legislatures have done several times.

In addition to the database, the statewide news site has also published conflicting accounts of the House road package in its own stories, including ones appearing on the same day. A Dec. 5 MLive story stated, “…the plan could take $535 million from school funding next year, according to the House Fiscal Agency.” However, another Dec. 5 MLive story gave a more accurate account of the proposal: "The House plan, backed by House Speaker Jase Bolger, wouldn’t cut funding for schools or cities, but it would limit future revenue that would otherwise be available."

On Dec. 10, MLive published another story claiming that, “West Michigan schools stand to lose millions,” and cited the same Michigan League for Public Policy that is the main source of the database.


See also:

School Budgets Safe Under 'No New Taxes' House Road Funding Package

House Road Plan is Solid

Projections Show Schools Get Even More With Road Funding Shift

'Let's Make a Deal' Time on Road Funding?

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.