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Income Tax Shift Stopped. . .For Now

Jennifer Smith

By Jennifer Smith, MASB Director of Government Relations

DashBoard, Dec. 14, 2016

Last week, the Governor proposed and pushed for a vote on a plan to shift more than $430 million from the School Aid Fund to the General Fund.

Under current law, the SAF receives, on average, 23% of the gross revenues from the income tax. Under the proposal, that would change to net revenues, meaning that all credits and refunds would be paid out of the total revenues, and then the 23% would be distributed to the SAF. Based on last fiscal year, the shift from gross to net revenues would cost the SAF $430 million, or almost $300 per pupil.

However, after pressure from legislators, education organizations and, most importantly, board members and superintendents, the Governor and the Speaker of the House announced Thursday night that they would not pursue the plan. The Governor also maintained that this is still the right thing to do and the conversation may come up again during the budget process.

It’s important for us to not let our guard down on this as the Governor and members of the Legislature have not completely abandoned this proposal, believing that it makes good accounting sense. We know this is not a simple accounting change; it is a fundamental change in how the School Aid Fund is funded. The current law is stable, and a move to net revenues would cause disruption and take money out of the classroom. Further, as income tax credits and refunds change year to year, it would become increasingly difficult to budget on this moving target.

Thank you for your effort and advocacy on this important issue. Your quick response helped to stop this reckless proposal. This is a great example of the power of your voice!

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