Blue Ribbon Panel Adrift, Suffers Unimaginative Revenue Secretary

Bob Mercer tweets that, contrary to my thought that the golf course restaurant where they met yesterday would serve them steak, the Blue Ribbon Task Force on Teachers and Students got a sandwich bar with bread and cold cuts for lunch yesterday. Maybe feeding the Blue Ribboneers what South Dakota teachers can afford on their last-in-the-nation salaries would inspire action?

Alas, no. After four official meetings and with just one scheduled meeting left, the panel has not laid out a clear policy agenda. According to Bob Mercer, the panel has “a loose list of topics to think about privately“… which is pretty much what we all had before the Blue Ribboneers started their public listening process last spring:

Among the many possibilities discussed in the seven-hour meeting were:

• Capping budget reserves held by school districts;
• Funding school districts on a teacher-students ratio rather than enrollment;
• Giving teachers a pay raise of $8,000 apiece, possibly over a span of years;
• Raising the state sales tax beyond the current 4 percent;
• Reconfiguring some current school tax levies; and
• Reducing property taxes for schools [Bob Mercer, “Education Task Force Has One Meeting Left and No Clear Path to Its Recommendations,” Aberdeen American News, 2015.10.01].

Amidst these many possibilities, teacher-blogger Michael Larson express frustration at the narrowness of vision on revenue options:

They did have Andy Gerlach speak for a little bit of time about sales tax, but no other type of revenue was dared discussed.  At one point Billie Sutton tentatively asked why income tax was not being talked about, and either Sly or Soholt (I couldn’t tell which) jokingly threatened to put it down that Sutton brought it up, and he backed away and basically apologized for the idea.  Then it was stated that only sales tax was brought up at the meeting.  I remember one group specifically mentioning that we need to look at a income tax or corporate tax.  I also remember the panel itself had a copy of polling data that says the tax payers would support come forms of income taxes and corporate taxes, but what the hell do the voters know… [Michael Larson, “And the Crickets Chirped in Pierre,” Taking a Left Turn in South Dakota, 2015.10.01].

Revenue Secretary Andy Gerlach’s slideshow on tax options was perhaps a little broader than Larson suggests, but nearly all of the options offered are regressive, and Gerlach tailored his remarks to portray an unimaginative increase the sales tax as “your best option.”

Secretary Gerlach said an additional percentage point of state sales tax would bring in $206 million a year. That would be enough to fund the grand bargain I proposed in June to raise teacher pay to $60,000. But it would also hit the poor harder than the rich, who are already socking away too much of the common wealth. Secretary Gerlach told the committee members that sales tax is “proven, reliable,” and has “potential for growth” (see slide 5), but he ignored new research that shows income tax is a more reliable long-term base for state budgets.

Secretary Gerlach seemed to dismiss the seasonal sales tax proposed in June by Rep. Lee Schoenbeck (R-5/Watertown). Gerlach said a seasonal tax requires businesses to reprogram their cash registers and accounting systems twice a year (but tell me, businesspeople: would that be any harder than adjusting your clocks for Daylight Saving Time?). More importantly, Gerlach said that consumers can evade a seasonal sales tax by timing big purchases to the off-season.

As if to make more regressive sales tax sound better, Secretary Gerlach discussed the even worse idea of a rural sales tax, under which the state would tack two percentage points of sales tax onto any purchases not subject to a municipal sales tax. Aside from the fact that every out-of-town implement dealer would come to Pierre to grind legislators up in the big six-head Claas Jaguar silage chopper, Gerlach noted that a rural sales tax would erode over time as more people and businesses move to town.

Secretary Gerlach threw out some spare-change ideas: tax cigarettes more (regressive), tax alcohol more (regressive), tax banks more (remember, South Dakota already has an income tax on a few corporations). Gerlach mentioned a broad corporate income tax but couldn’t muster the computational gumption to give the Blue Ribboneers solid numbers. He said a corporate income tax would be awfully hard to administer… although, golly gee, 44 other states find a way to do it. Where’s your can-do spirit, Andy?

Secretary Gerlach then forgot which meeting he was at and talked about cutting property taxes. Funny—I thought the Blue Ribboneers’ mission was to fund education meaningfully, not cut taxes. Defend, Andy, not defund.

Blue Ribboneers, correct me if I’m wrong, but I get the impression that no one on the panel has seized the tiller. The task force appears to be adrift, waiting for one of the many slideshow winds to prevail and blow them to some safe policy shore. With just one meeting left, October is the time for a few hardy souls to clear the brainstorming deck, grab the wheel, and shout, “Thar she blows!” Lay out two firm policy objectives—raise teacher pay to X, resist more regressive taxes—call around to build support, and come to the October 29 meeting with a formal proposal of your own.