Monday, October 27, 2014

Raise Sales Taxes For More Teacher Pay? I'm Okay With It, But How About Reviewing Exemptions First?

     South Dakota teachers are ridiculously underpaid, and that goes on the basis of both national and regional comparisons.  A nice graphic put out last Winter by the Washington Post shows the embarrassing news for all to see. Forgetting about comparisons with far-flung states, just look at South Dakota teacher salaries compared to those of our surrounding states.  How on earth we get any of our outstanding and dedicated teachers to work here is amazing to me. The old canard that it's okay because living costs in SD are cheaper than elsewhere has long since been worn away by facts and data that I have yet to see challenged, much less refuted.  Fact is, our teachers are undervalued.
     Given the results of some recent polling on how residents feel about this, I'd say most South Dakotans get it.  In fact, South Dakotans get it so acutely that by a 2-to-1 margin, they favor increasing sales taxes during the Summer months in order to raise the cash needed to boost teacher salaries.  I can't recall ever seeing a majority of that magnitude willing to increase taxes for anything. You'd have to conclude from this poll that a lot of South Dakotans are fed up with our status as collective cheapskates when it comes to paying our teachers.
     You can count me among them, but before we go jacking up tax rates let's pause and consider our sales tax system itself. First off, per this graphic from the Tax Foundation, South Dakota ranks 40th in combined state and local tax rates.  We've definitely got some room to the upside compared to the rest of the country. But even at that, there's a hidden trove of sales tax revenues that could be uncovered:  I think there's money to be derived from reviewing the state's unbelievably long list of sales tax exemptions that totalled $582 million in 2013. Some of them are just plain ridiculous.  For example, why should advertising services be exempted, to the tune of $7 million a year?  Railroads get $10 million worth of exemptions.  Credit card processors another $3 million,  The list goes on. Financial services like brokerage and insurance agencies are exempt from $10 million.  The ag industry gets $222 million a year worth of exemptions, which make for a long list, probably much of it justified, but given this era of $3.00 calves and $10.00 soybeans, I suspect that list could be compressed a bit without causing much pain to the ag sector.  For example when my business needs equipment to be repaired, I pay sales tax just like everybody else.  Why do farmers get $13 million dollars of exemptions when they get their stuff fixed?  Nothing against farmers, but the bottom line here is that we're all in this together.
    By all means, let's look at sales taxes as a way of raising money for teacher salaries.  But before we ding ourselves en masse, let's take a look at some of the special interests and their customers that could reasonably be expected to pay a little something for their goods and services just like the rest of us.


  1. I am strongly in favor raising teacher salaries, and paying higher taxes to that end if necessary, as long as we remember that higher salaries are a means to end. The reason to pay more is to improve education for our kids.

    If we continue to pay bad teachers the same salary, to the penny, as we pay good teachers, we are not getting a good educational product, and we are wasting our money. Higher salaries--much higher, if I have my way--must be tied to performance. As long as the teachers' union continues to fight for mediocrity in the classroom instead of excellence, they are poisoning their chances for higher pay. One example: a teacher at West Junior High (as it was then named) was fired for repeatedly falling asleep in his own class. The teachers' union appealed and won, and the incompetent teacher was reinstated. Unconscionable.

    More money for teachers? Yes, emphatically. Differential pay, based on performance? Yes, emphatically.

    Don Frankenfeld

    1. Right now I think we have to get our pay scales in line with those around us just so we can develop a pool of teachers whose salaries are market-based. I'd say the West Junior High example is valid, if extreme. Issues like union influence and pay differentials are well worth addressing once the field levels and we get a cadre of teachers in South Dakota who choose to be here because salaries are competitive. It stands to reason that many of the best incoming teachers will bypass South Dakota just because the pay is so far below what the market is willing to pay them elsewhere. That has to change.

  2. Sorry John, But I have to disagree with you on doing this through sales tax. One, in the summer says that we want our tourists to pay for it, which still leaves us looking like cheapskates. Also a sales tax to pay for it shifts the burden where it does not belong to the poor and middle class. The burden belongs on the property owner.

    When the State froze property taxes and required local, county and school district units of government to opt out if they wanted to increase taxes, they in essence froze the counties and school districts who only live on the property taxes, while allowing the State and municipal governments that rely on sales taxes for the majority of their revenue, to have an ever increasing cash cow to do their projects.

    In most case property owners' property is worth far more than it was twenty years ago and the property owners' assessed valuation has not kept up with the actual value of that property. Their income has also increased in that time and if they wanted to renew their mortgage and use that property as an ATM, they were able to take cash value from their home and have the same payment as they had before because the Federal government is keeping their interest rates low.

    In the meantime the renter, and I am one of them, has had their rent increase by a wide amount in that time. I was paying 320 per month for my 1 bedroom apartment 20 years ago and pay 520 today. My landlords taxes have gone up more than the single family homeowners, because he does not get the benefit of the homeowner in resident deduction.

    THe property owner whose property is worth more gets the best deal of all in the property tax freeze, because even though his property is worth more his taxes are frozen like those of everyone else so he saves more.

    Joy Smolinsky presented for South Dakota Budget and Policy Institute around the State, last month asking about this very issue. At the meeting that I attended here in Sioux Falls, I suggested that the best way to fund education and also the counties, who are hurting as well because of the property tax freeze, is to add 1.00 to the mill levy of between 18 and 19 dollars. 75 cents of that would go to the school district and 25 cents to the county. That would increase the tax on 100k property by 100 bucks, a 200k by 200 bucks and so on. The law could be reset to allow for that and then also to remove the freeze from school and county taxes since they have no other means of funding their work. Here in Minnehaha, the increased cost of alcohol consumption and related law enforcement and particularly court system and jail is on the county and not sustainable with the taxes frozen.

    It has amazed me as a person watching from the sidelines. We approved a 115 million dollar events center here, which is just being finished completion and is already over that in price. It was approved on 50% plus 1 vote. In the meantime a school district that has a school in the city limits of Sioux Falls, (there are three of them besides Sioux Falls) has voted at least three and maybe four times on a bond issue to build a new school. It has failed each time, but it requires a 60% vote to pass. That does not make sense to me.

    And finally, the state needs to live by its own constitutionally and by law passed by the legislature and signed by the governor law funding education at 3% or the COLA whichever is less. It cannot change as it did in 2011 for the 2012 budget year and then never adjust back as it should have.

  3. Don, as a member of SDEA, the union you claim "continues to fight for mediocrity in the classroom instead of excellence," I have to take issue with your position. First, I think it is worth noting that you attribute the union with the unstoppable power to save bad teachers, yet this same union seem quite stoppable when we advocate for higher salaries to align to our regional competition. You grossly overestimate SDEA's power and intentions to the point of showing that your aim is to vilify "unions" and create a boogieman, a scapegoat for the real issues. I don't know the details of the story of your West Junior High teacher, but I am willing to bet all the money in my pocket against all the money in yours that there is more to that story than you present here.

    SDEA strives for teacher excellence. Over the past years, SDEA in cooperation with the SD DOE has completed and piloted a professional growth/evaluation/accountability model that focuses on fostering the best teaching practices. Those best practices improve instruction and learning for all children in SD classrooms. That is what my union stands for. State education outcomes are high; our students get a good education from our teachers. Now, are you willing to fairly compensate those teachers, or are there more boogiemen of fear monger?

  4. John, I was just doing some research on the internet on another subject and brought up an article from the Trail of Governors, about Bill Janklow's term as governor. I guess I was too busy working at the time to have noticed, or maybe I was already a renter by the time this happened, but either way, this may explain the crux of the problem that I pointed out in my previous post.

    From the article:

    "During his second two terms, Janklow stopped a statewide property tax revolt and decreased property taxes by 30 percent, "

  5. Actually, you illustrate my point. I am an advocate for excellence in education, and I am willing to pay more for it. Yet I am unlikely to be an enthusiastic supporter of higher taxes if the extra money is spread willy-nilly to both superior teachers and mediocre teachers. Here is a chance for the SDEA, like AFT and some other unions across the country, to join President Obama and Arne Duncan and take a stand for excellence. That, by the way, is the constitutional right of our children, and recent court cases are moving in the direction of rights for kids, even at the expense of encrusted tenure policies. Call me names, demonize me if it makes you feel better. If character assassination is your normal mode of dealing with criticism, maybe you should run for public office. Just realize that your attitude is antagonizing the folks (like me) with whom you should feel a natural alliance.

    I come from a long line of teachers--grandparents, parents, my children, and many inlays. Higher pay is a perquisite; so is a union that embraces excellence instead of viewing it as a threat.

    Don F

    1. Don, again your supposition is that there is some hoard of mediocre teachers when the research his not showing that. Somehow the singular story of "the bad teacher" is elevated to plague status. Only by creating a strong pool of teachers will SD ever expect to become more selective in candidates offered positions in our schools. By the way, it was not the unions that hired the mediocre teacher you speak of. Once that teacher comes to light (and it is stunning to see how little evaluation happens in many schools), why do you rush to blame the union for the perpetuation of that teacher in that position - where is the ire for the administration/system that does not work to improve that teacher so that the students’ needs are met. Why is education excluded from the expectation that management develops its human resources to best accomplish goals? SDEA wants to be part of a process that makes ALL teachers more effective in their classrooms. Our state union (and its cooperating partners) is not just an advocate for excellence, it is an agent of action toward that goal.

      I would also remind you that the Constitutional obligation in SD is for that education to be adequately funded by the state. SD does not have the tenure policies that ensure employment for life that you allude to. Even in the face of the evidence that SDEA embraces excellence and works toward greater accountability, you fall back to your original point that excellence is viewed as a threat - that is not the case, not in SD, not given our association. Do not assume the worst characterization of national union mentality is a fair or accurate representation of SD. Our state accountability is far and away ahead of much of the nation - even President Obama and Secretary Duncan. That is good for both our profession and our students.

      I do not call you names. I point out that your assertions are unfounded and that your one example of the sleeping teacher is atypical and unexplained. I also reject your using "union" as an aspersion, and I show that your characterization of the SD teacher union is inaccurate. Don’t play the victim when your publicly published positions are called out for their inaccuracy.

  6. We always hear about teachers being underpaid in SD. What about everyone else. Are other industries/workers underpaid compared to everyone else. These are the people that will be paying for the teacher's raises.

    1. Very good point, anonymous. I suppose that because teachers are public sector employees that public policy can be directed at raising their salaries. Those in the private sector have no real access to that option, other than the minimum wage increase, which affects a relatively small number of private sector employees.

  7. It has not stopped from raising the pay of part time legislators and giving them travel and expense money for going to ALEC conferences or the Governor's pay or that of other state employees in the management end. Nor has it stopped those in management from being able to dip into other state monies, like EB-5 and the Governor's Redi fund. Oh well le the teachers leave the state, like we have been, and I imagine the way a lot of other people will be after this election. Dumb the electorate down to where they buy the political ads that spend the most money. That is how to maintain control of the government, be it local, State or Federal.