State legislators considering numerous cuts to school revenues

Numerous niche tax breaks doled out by the state are eroding Michigan’s School Aid Fund, resulting in fewer resources for local schools, and education advocates are united in opposing these tax giveaways.

The latest in the long line of breaks is House Bill 4831, which if passed would exempt over-the-counter medications from the sales tax. This would result in a $7.3 million reduction of revenue for the School Aid Fund, according to the nonpartisan House Fiscal Agency.

The legislation is opposed by a coalition of education groups consisting of MEA, the Michigan Association of School Boards, the Middle Cities Education Association, the Michigan Association of School Administrators, the Michigan Association of Intermediate School Administrators, the American Federation of Teachers-Michigan, the Michigan Elementary and Middle School Principals Association, and the Michigan Association of Secondary School Principals.

“While this particular bill may seem to be only a small decrease to the SAF, when added to the many other policies recently passed and being considered, they continue to erode the School Aid Fund and add up to a significant amount of money over time,” the coalition wrote in a recent letter to lawmakers.

Since January, House committees have passed several tax breaks that would reduce revenue to the School Aid Fund. These include:

  • Senate Bills 89-90 and House Bill 4234, which would eliminate the sales and use taxes on the difference between the value of a trade-in and new vehicle, resulting in a $152 million loss in school aid
  • Senate Bills 142-143, which would eliminate sales and use taxes on prewritten software, causing up to $11 million in lost school revenue
  • House Bill 4135, which would eliminate the requirement to pay local school operating mills on foreclosed properties and result in up to $42 million in lost school funding
  • House Bill 4572, which would eliminate the sales tax on aviation fuel and reduce school funding by up to $41 million

“We urge you to look very closely at this bill and similar ones and the collateral damage they have over time,” the coalition said in its letter. “Our schools will continue to see cuts if the School Aid Fund does not receive the revenue necessary to support our students and communities.”