I. Description of the Proposal

Proposal A is a constitutional amendment placed on the ballot by the legislature in House Joint Resolution G on April 1, 1993. It has three main components: property tax reduction and limitation, sales and use tax increases, and a per-pupil school funding guarantee.

Specifically, the proposal would:

  1. Reduce school operating property taxes, and limit them to no more than 27 mills. Currently, the average rate is about 35, and has been increasing in recent years. Most school districts – over three-quarters – would initially levy only 18 mills, which would not require voter approval. Additional mills – up to 9 – would require voter approval. This reduction in school millage would reduce property taxes by over $2.1 billion a year.

  2. Limit the total operating property taxes of all units of local government, other than cities, villages, and charter authorities, to no more than 40 mills. Currently, these units are limited to 50 mills in total, and the reduction to 40 mills would prevent other units of local government from raising their millage rates to offset the school tax reduction.

  3. Limit the annual percentage increase in the assessed value of each parcel of property to the inflation rate or 5%, whichever is less, until the parcel is sold.

  4. Increase the state sales and use tax rates to 6%, starting in July of this year. This will raise an additional $1.7 billion in 1994, but only half that in the current year. Because the sales and use tax increases would only affect half this year, and the property tax cut the entire year, taxpayers will save about $1 billion in 1993. Net savings after that grow from about $230 million in 1994 to $280 million in 1996.

  5. Dedicate the additional sales and use tax revenue, and net state lottery proceeds, to the school aid fund.

  6. Establish a minimum state and local per-pupil school funding guarantee, beginning at $4,800 and adjusted annually for changes in state revenue. School districts would be guaranteed at least a 3% increase in funding per pupil in the first year. This per-pupil guarantee would not be available to private schools. However, it would establish the principle of dollars-follow-students, and therefore would ease a future transition to a full choice system.