John Patterson of the Daily Herald has a good story here on a follow-up on Michigan's education funding plan. In 1994, they did the big swap, switching higher state taxes for local property taxes and putting the money into education.
The upside: poor kids got better schools, since the impossible task of generating money from a property-poor area no longer precluded those kids from getting a decent education. There was state money for schools.
The downside: all the states, including Michigan, are broke. That means money for schools has dried up in Michigan, while in Illinois, the local property tax has kept lots of schools in a better position. The property tax never really changes. People might have to move out because they can't afford it, but it is a stable workhorse of a tax. The sales and income tax revenues fluctuate with the economy -- when things are going well, lots of money comes in. When things are not going well, like now, the money stops.
So tying education money to our income and sales tax revenue has a downside, as Michigan shows.
That's why Ralph Martire and proponents of the swap are also calling for higher and broader taxes: a tax on services, not just goods, because services are growing as a relative share of our economy while goods are shrinking, and it doesn' t make sense to tax the shrinking share of the economy and not the growing share as well. And *that* is why conservatives are against the proposal. They don't want higher or broader taxes. At all.
I think our 3% income tax is too low, and our 6.25% state sales tax is too high -- especially when it tops out at 11% (!!!) in Chicago with the County, City, RTA and McPier local sales taxes added on. But the missing piece in education funding is an accountability measure to ensure the money goes to hiring good teachers and buying needed equipment, and not just fattening the pensions of the past.