Don Tracy, Candidate for Illinois Senate

TRACY'S PLAN SHIFTS MORE SCHOOL FUNDING TO INCOME TAX

September 4, 2002, SPRINGFIELD, ILLINOIS - In response to the school funding crisis, Don Tracy, Candidate for the Illinois Senate (50th District) proposed a plan to shift more of the cost of public education from property taxes to the state income tax. Tracy agrees with the diagnosis of the problem by the Education Funding Advisory Board (EFAB), but proposes a lower tax increase.

"Many school districts now have a bitter choice: Downgrade or increase property taxes through a referendum," Tracy said. "The fairest, most feasible and long-term solution to the school funding crisis is to transfer more of the cost of K-12 education from property taxes to income taxes."

Tracy's plan would partially freeze the education portion of property taxes and increase income taxes from 3 percent to 3.5 percent. Most of the additional $1.4 billion in revenue would be used to increase the basic per-pupil spending level by nearly $900. Five percent of the new revenue would go to private and parochial schools. "Such an increase in revenue would immediately restore financial health to most school districts," Tracy said.

EFAB's preliminary report found disparities in funding and property tax rates across Illinois, and noted the social costs of poor public education. "This financial crisis is a threat to quality public education in Illinois," Tracy said. "Already, some school districts are cutting teachers, curriculum, and sports." Tracy calculates that District 186, which includes Springfield, would receive about $13 million under his plan. His plan also provides relief to retirees, who pay property taxes but not the state income tax.

Tracy proposes:

• virtual freeze on the education portion of property taxes (about 60% of real estate taxes) by tightening tax caps and providing financial incentives to lower tax rates;
  
• That income taxes be increased over two years from 3% to 3 1/2% for individuals with a corresponding increase in the corporate income tax;
  
• That this new money of $1.4 billion be spent as follows:
  a) 95% to increase the annual foundation spending level per pupil from $4560 to $5360
  b) 5% for additional services to non-public and parochial schools (special education, drivers' education, technology, textbook loans, education tax credits, etc.) to benefit the 15% of Illinois school children who attend such schools and forestall additional parochial school closings.
  
• That school districts be encouraged to upgrade and become more efficient through reorganizations with financial incentives as recommended by EFAB.

To explain his alternative proposal in more detail, Tracy will hold a conference in the Blue Room at the State House today at 2:00 p.m.

Tracy agreed with the points EFAB made in its preliminary report:

1. The current general aid formula foundation level of support is $4,560, which is about $1,000 less than the amount recommended to assure adequate funding.
2. Across the state, spending of tax dollars on public education ranges from less than $5,000 per pupil to over $15,000 per pupil.
3. Property tax rates vary from less than 1% to over 8% (Low rates tend to be in districts with high real estate values; high rates tend to be in districts with low real estate values).
4. Although it costs more to educate children from low income families, rich districts have 1.5 times more property tax revenues than school districts with high concentrations of poor children.
5. Illinois has one of the most regressive (unfair) tax systems in the United States. Currently, our bottom 20% of income earners pay 13.5% of their total income to the State in taxes, while the wealthiest 1% pay only 4.9% of their total income.
6. Illinois has a relatively low income tax. As a consequence, the State's share of K-12 education is 37%, ranking 48th in the nation, and Illinois property taxes are significantly greater than in other states.
7. 61% of Illinois school districts currently spend in excess of revenues.
8. Under the current system of education funding, meeting the goals mandated by the federal No Child Left Behind law will be difficult if not impossible.
9. 50% of Illinois welfare recipients are high school dropouts.
10. 30% of prisoners in Illinois Department of Correction institutions cannot read at a sixth grade level.
11. Illinois has nearly 900 school districts, with many organized under a dual structure with duplication of taxing authority, boards of education, administration, transportation systems, etc.

To address this crisis, EFAB has preliminarily proposed a tax increase of up to $8.2 billion. This would fund up to: (a) $4.6 billion in property tax relief; and (b) $3.6 billion in new money for schools. Tracy calls for a more modest tax increase.

"If not corrected soon," Tracy said, "public schools will be reduced to educating only the poor and special education children. If this trend is allowed to continue, public support for education will decline and prison spending will increase."

DRAFT

MEDIA RELEASE

DON TRACY'S EDUCATION FUNDING PLAN WOULD MEAN
OVER $20 MILLION FOR 50TH DISTRICT SCHOOLS

September ___, 2002, SPRINGFIELD, ILLINOIS -- In response to the school funding crisis, Don Tracy, Democratic Candidate for the Illinois Senate (50th District) has proposed to increase the state income tax by 1/2 of 1% and freeze the school property tax. Seniors would benefit because they pay property taxes while income is exempt from the state income tax. Also, $285 million of the tax would be, in effect, paid by the federal government due to itemized deductions.

Tracy's plan would raise $1.4 billion in additional revenue for education and increase the per pupil's foundation spending level to $5,400. According to the State Board of Education, such an increase in revenues would produce the following additional state aid monies:

In response to Tracy's proposal, his opponent, Senator Larry Bomke Rspringfield, said that although he would support a dollar-for-dollar income and property tax swap, Bomke would not support a general income tax increase. Bomke also said that he had not had a chance to study the EFAB proposal to determine what parts would be acceptable to him.

Tracy said, "The dollar-for-dollar income-property tax swap advocated by Senator Bomke would be very bad public policy for at least two reasons. First, such a swap would, by definition, produce $0 new revenues for schools. Second, according to the 1998 Commission on Property Tax Reform, corporations pay 50% of all property taxes, but only about 15% of income taxes. As a result, a tax swap would result in a substantial tax increase for consumers and a large tax decrease for corporations."

For example, a $1 billion swap from property to income taxes would mean a net $350 million tax increase to abe paid by individual taxpayers, and a corresponding $350 million tax decrease for corporations.

According to EFAB, 60% of Illinois school districts statewide are losing money. In the 50th District, the great majority of school districts are now operating at a deficit, meaning that they are spending in excess of revenues.

For Immediate Release.
Contact Don Tracy - 544-8491, Ext. 260 (work); 741-8612(cell) or 726-9635 (home).
Citizens For Tracy - 544-9670 or Jeff Stauter 753-1190