HB 346, which increases gross receipts taxes by three quarters of a percent to supplement public education funding passed the House on March 13 and heads to the Senate. The bill represents an extremely large tax increase, raising revenues $389 million in FY 2010, which begins in July, and over $400 million for 2011. The bill should be viewed in connection to HB 331, which changes the school funding formula in various ways. The connection is this: HB 346 funds the changes proposed in HB 331. As HB 331 is written, if HB 346 does not pass, the changes proposed in 331 will not be enacted. HB 331, like HB 346, has passed the House and is headed to the Senate.
So what, exactly, does HB 331 do? It changes the funding formula to provide extra money for students needing more help than usual, such as children from families living in poverty, children with learning difficulties, and students who cannot speak English. Should both bills pass, school districts will receive extra funds to assist these children based on the demographic characteristics of each district, including the factors listed above. While it seems unlikely that every penny of the extra revenue will be used exclusively on poor children, non-English-speaking children, and students with learning difficulties, there will at least be fewer excuses districts can make for failure to accommodate such students and, hopefully (dare we hope?), the performance of students outside the specified categories, would also go up.
Entrenched special interests within the education establishment have been staunch advocates of these bill, which would make up what is said to be a 15% "shortfall" in funding. Even in Albuquerque, which would pay more than its fair share in taxes for this funding compared to the extra revenues it would get for schools, teachers are in favor of the bill, prodded along by the Albuquerque Teacher's Federation.
What are the chances the bills will pass through the Senate? Slim.
The governor has been arm-twisting in favor of the bills, but there are rumors of a movida to remove the contingency between the two bills, forcing school districts to reallocate their existing budgets if HB 346 does not pass and funding is denied. If the contingency is removed school districts would if effect be given (those dreaded words again) unfunded mandates to force schools to increase help for non-English speaking children, poor children, and children with learning abnormalities; that is to say, children whose parents don't tend to have a lot of political clout. Under these conditions a great deal of public support for 331 would evaporate from parents who do not come under the affected categories, especially parents in highly liberal, but relatively wealthy and Anglo districts who are concerned about the poor and underprivileged only when the mandates are fully funded, not when funding for them comes out of the budget for their own kids. The movida thus appears to be a wickedly inspired effort by conservatives to remind everyone that liberal supporters of both bills, including the entrenched educational establishment, really don't care as much about the children being served by HB 331 as they do about kicking up overall funding to public education by 15% under HB 346. Don't worry, liberals, the movida is highly unlikely to actually get off the table. It was floated mainly to make you nervous.
Bottom line: given the revenue projections (price of gas is even lower now than when the last dire projections came out a couple of weeks ago) it seems unlikely the bill will survive the scrutiny of the Senate Finance Committee. State finances are on the flimsiest of platforms of contingency already, and if one of the legs of the stool collapses, a huge emergency will arise. There are probably a number of senators who would like to see the bill get killed in the Senate Finance Committee, because if it makes it to the floor, they would face the cross-pressure of having to decide between voting for a massive tax hike (facing the wrath of negative campaign ads down the road) and voting against education. Sen. John Smith can take the blame for killing the bill, without forcing senators to commit to a yes or no. You can tell your conservative constituents the tax hike was bad, and tell your liberal constituents Smith killed it. However, should the bill make it to the floor it will probably go down by a vote or two along the same lines (but not identical) as the vote for Jennings on the floor on the first day of the session. But my confidence in this last statement is not very high; it could conceivably pass.