Paying school tax on 2nd homes?

Critter7r said:

I was addressing only your statement about you being very surprised if someone's taxes went "directly into a school fund", and showing that in my township, specific portions of one's property taxes do exactly that. And even more specifically, in my township, the ENTIRE amount of the non-homestead tax goes to that fund. (The additional taxes that are paid by owners of non-homestead properties was what the OP was complaining about).

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I'm not exactly seeing that from the Holly budget. FY 18 revenues of $2.78 million, and departmental expenditures (none of which include a school fund or contribution) of $2.756 million. More than half of township revenues go to police, and almost another quarter goes to general government.

I'm not an expert in your local and county finances, but what I'm saying is just because those breakdowns are illustrated that way for the public's reference and information does not always or necessarily mean the taxes literally and directly go into a dedicated school fund that restricts the money for that purpose. It's usually up to whatever legislative body passes the budget that includes school funding to decide to spend that amount of general fund money on education each year. Usually primary taxes like property (and sales in some places) go into a general fund, and general fund expenditures/appropriations are to any variety of other things, one significant piece of which is usually education, but that usually does not mean "property taxes pay for education." Everything going into the general fund pays for everything the general fund funds.

We do this same thing in my community. On the reverse side of every property tax bill is a breakdown of "how your property taxes are spent," but it's not literal, it's just essentially the expenditure breakdown from the general fund. The literal property tax dollars are not strictly allocated in that manner. What's allocated is the legislature (e.g. Assembly's) prerogative each and every budget cycle.

So let's say the staunch anti-tax crowd wins a super-majority of the elected legislature and they decide to make property taxes voluntary for anyone without kids in the school system, citing the belief that "property taxes pay for schools." What they've really done is slash general fund revenues and now they have a dilemma about what actual outlay(s) they need to cut to balance their budget (which would be a major act of governmental self-sabotage), or where else they're going to raise the same amount of revenue instead (which is just a tax policy/accounting swap). If they were then to go so far as to slash schools, they create a teacher strike, an education crisis, an exodus of families from the area, and so forth. Very damaging.

Breakdowns of "how your taxes are spent" are often a mere visual tool for taxpayers to understand that government's overall budget breakdown. It's not necessarily a depiction of actual accounting restrictions on that money. Maybe some places literally restrict the money as it comes in, but I'm not sure that's the norm for state and local government.

Neomalthusian said:

I'm not exactly seeing that from the Holly budget. FY 18 revenues of $2.78 million, and departmental expenditures (none of which include a school fund or contribution) of $2.756 million. More than half of township revenues go to police, and almost another quarter goes to general government.

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I think you may have stumbled across the Village's budget numbers. The Village is contained wholly within the Township, but is self-governing. All Village residents pay Township tax PLUS Village taxes. The Village tax is an additional 10.x mils, and doesn't include that 3.something mils that non-Village residents have to pay to the Township for County fire and police protection, because the Village has its own police and fire departments.

I'm not an expert in your local and county finances, but what I'm saying is just because those breakdowns are illustrated that way for the public's reference and information does not always or necessarily mean the taxes literally and directly go into a dedicated school fund that restricts the money for that purpose. It's usually up to whatever legislative body passes the budget that includes school funding to decide to spend that amount of general fund money on education each year. Usually primary taxes like property (and sales in some places) go into a general fund, and general fund expenditures/appropriations are to any variety of other things, one significant piece of which is usually education, but that usually does not mean "property taxes pay for education." Everything going into the general fund pays for everything the general fund funds.

We do this same thing in my community. On the reverse side of every property tax bill is a breakdown of "how your property taxes are spent," but it's not literal, it's just essentially the expenditure breakdown from the general fund. The literal property tax dollars are not strictly allocated in that manner. What's allocated is the legislature (e.g. Assembly's) prerogative each and every budget cycle.

So let's say the staunch anti-tax crowd wins a super-majority of the elected legislature and they decide to make property taxes voluntary for anyone without kids in the school system, citing the belief that "property taxes pay for schools." What they've really done is slash general fund revenues and now they have a dilemma about what actual outlay(s) they need to cut to balance their budget (which would be a major act of governmental self-sabotage), or where else they're going to raise the same amount of revenue instead (which is just a tax policy/accounting swap). If they were then to go so far as to slash schools, they create a teacher strike, an education crisis, an exodus of families from the area, and so forth. Very damaging.

Breakdowns of "how your taxes are spent" are often a mere visual tool for taxpayers to understand that government's overall budget breakdown. It's not necessarily a depiction of actual accounting restrictions on that money. Maybe some places literally restrict the money as it comes in, but I'm not sure that's the norm for state and local government.

Click to expand...

That's a lot of conjecture that I won't get into addressing all specific-like, but I can tell you that in my township, the funds get allocated in the manner described in the graphic that I posted.

Critter7r said:

I think you may have stumbled across the Village's budget numbers. The Village is contained wholly within the Township, and all Village residents pay Township tax PLUS Village taxes. The Village tax is an additional 10.x mils, and doesn't include that 3.something mils that non-Village residents have to pay to the Township for County fire and police protection, because the Village has its own police and fire departments.

That's a lot of conjecture that I won't get into addressing all specific-like, but I can tell you that in my township, the funds get allocated in the manner described in the graphic that I posted.

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I see. I was hoping to quickly hone in on whatever budget illustrates the dedicated funding from property taxes to schools to see if there is an actual school fund, or whether property taxes actually just go into the general fund and appropriations for schools are their own annual budget decision. This might seem insignificant to some people, but when an argument is being made that one shouldn't have to pay a tax because of what the tax funds, I think the actual accounting matters in that discussion.

A lot of people think they shouldn't have to pay taxes, and that government spending should be cut drastically, but then will not go so far as to actually agree with any actual significant expenditures being cut. As soon as you get specific, the anti-tax crowd very rapidly runs out of ideas as to what can be cut. To most of them it just sounds good to cut spending, but few of them actually want the direct consequences of those cuts.

In any case, if the public expenditure on schools is decidedly too high, based on relevant apples-to-apples comparisons with the rest of the state or country, I think that's an issue with the school board's fiscal decisions and ability to contract responsibly with administrators and teachers, as well as a legislative appropriations issue, not a tax fairness issue.

Neomalthusian said:

I see. I was hoping to quickly hone in on whatever budget illustrates the dedicated funding from property taxes to schools to see if there is an actual school fund, or whether property taxes actually just go into the general fund and appropriations for schools are their own annual budget decision. This might seem insignificant to some people, but when an argument is being made that one shouldn't have to pay a tax because of what the tax funds, I think the actual accounting matters in that discussion.

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The taxes that are collected do go into the general fund and the Township writes a check to each school fund based upon the calculations in the graphic I posted. Only the Holly Area School System is local, but the Township just collects the money on behalf of the State, it isn't an annual budget decision on the part of the Township government as to how much gets sent to which school fund. The County and State may make those decisions annually based on tax revenue projections, but it's more likely that it's reviewed only every few years and probably adjusted less often than that.

A lot of people think they shouldn't have to pay taxes, and that government spending should be cut drastically, but then will not go so far as to actually agree with any actual significant expenditures being cut. As soon as you get specific, the anti-tax crowd very rapidly runs out of ideas as to what can be cut. To most of them it just sounds good to cut spending, but few of them actually want the direct consequences of those cuts.

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Totally agreed.

In any case, if the public expenditure on schools is decidedly too high, based on relevant apples-to-apples comparisons with the rest of the state or country, I think that's an issue with the school board's fiscal decisions and ability to contract responsibly with administrators and teachers, as well as a legislative appropriations issue, not a tax fairness issue.

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agreed again.

Neomalthusian said:

I see. I was hoping to quickly hone in on whatever budget illustrates the dedicated funding from property taxes to schools to see if there is an actual school fund, or whether property taxes actually just go into the general fund and appropriations for schools are their own annual budget decision. This might seem insignificant to some people, but when an argument is being made that one shouldn't have to pay a tax because of what the tax funds, I think the actual accounting matters in that discussion.

A lot of people think they shouldn't have to pay taxes, and that government spending should be cut drastically, but then will not go so far as to actually agree with any actual significant expenditures being cut. As soon as you get specific, the anti-tax crowd very rapidly runs out of ideas as to what can be cut. To most of them it just sounds good to cut spending, but few of them actually want the direct consequences of those cuts.

In any case, if the public expenditure on schools is decidedly too high, based on relevant apples-to-apples comparisons with the rest of the state or country, I think that's an issue with the school board's fiscal decisions and ability to contract responsibly with administrators and teachers, as well as a legislative appropriations issue, not a tax fairness issue.

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I think part of the confusion is based on the fact that school taxes are collected differently in different parts of the country. I'm guessing that you probably live in a part of the country that funds schools differently. I'll try to expand.

In some parts of the country (in my case, Texas, and wherever the OP has the homes) school districts are independent government entities with the power to tax. Much of this funding comes from property taxes. These taxes are allocated based on an amount per $100 of value (at least here). Each taxing entity (school, community college, hospital, etc.) has a line item on the tax assessment for what they tax. However, there are often cases where you can adjust the overall property value you are taxed on -- for example, a primary residence (homestead) gets to subtract a certain amount from the overall value - instead of $150K my taxes might be based on $100K. (There are other exceptions as well).

As a side note -- property taxes have historically been a very poor way to fund school districts, as it's based on the taxable value of the property. For example, you may have a older suburban community with a lot of apartments, meaning you have a lot of kids without a lot of tax base. Then another district has a commercial district with a large tax base and not many students. I also lived in a small town once with a huge power plant just inside the boundary -- they funded a very nice program off of that tax base.

The fairness of any tax is complex. Personally, I think that if they are going to do this, it makes sense to get the homestead exemption once, on your primary residence. Everyone gets that one exemption that owns a house. If you have a vacation property, that's an extension of your one residence. It gets more complicated with rental property, where the renter doesn't get a benefit (taxes are passed on through rent). The alternative is to not give the exemption to anyone and charge a lower rate -- which will never fly.