The Ladue Schools Proposed Tax Increase

A proposal for a substantial tax increase is on the ballot in the Ladue School District next week. Substantial is not a loaded term – 49 cents added to a current tax of $2.75 is a large percentage and a substantial increase, no matter what this drivel says. This works out to $279 per year for a $300,000 home, and many of the homes in the district are worth much more than that.

The tax increase is needed, according to supporters, in order to (among other things) pay for the operations of a new building the district purchased in 2010. The school district says their projections on revenue were off, but it is not their fault:

“It was so unprecedented. At that point and time, it was hard to imagine that kind of downturn,” said Susan Dielmann, district spokeswoman.

That statement is referring to a choice made in late 2009/early 2010, and it is just crazy. By that time, it was apparent to many people that we were in for a long and difficult economic recovery, and the idea “everybody just assumed the economy would be terrific by 2011” is preposterous. From USA Today in late 2008 (emphasis added):

Others are gloomier. They expect continued job losses and depressed consumer and business spending throughout the year because of tight credit conditions. The resulting damage to the consumer and business psyche will change the very nature of the economy for years to come.

Many families within the Ladue School District send their children to private schools. So, it should hardly surprise people that many taxpayers within the district who do not, will not, or never did use the public schools are opposed to a dramatic tax increase to pay for something the district probably should not have bought in the first place.

On the other hand, someone once did a study demonstrating that high MAP scores have a positive effect on property values within the Ladue School District, so there is no denying that if the tax increase is necessary to maintain the quality of the schools that the taxpayers will recover a portion of those taxes via property values and sale value. However, it is hardly obvious that the new tax dollars are required to maintain the high district rankings and educational quality. Supporters of the proposal obviously think it is, and opponents think it is not. I do not live in the Ladue School District so I cannot say, but the relationship between per-pupil expenditures and school achievement is far from exact. (Clayton and Ladue certainly spend a very high amount per student and are terrific schools, but there are plenty of counter-examples.) 

Even if the tax increase maintains or improves the school quality, some of that property value increase will be offset by lower values due to the higher taxes. That study also demonstrated the positive effects that low taxes can have on property values. I do not pretend to know how the exact relationship (MAP scores vs. tax rates) would work out going forward. The gains from education quality (if the higher taxes lead to that, which is far from certain) may outweigh the loss from higher taxes. But I do predict that, if this passes, more residents in the Ladue School District will appeal their property tax assessments to try to capture some of the real estate decline and offset the higher tax rate. That will limit the effectiveness of the tax increase.

Election day next week is going to be very interesting in the Ladue School District. I fail to see how a tax increase this substantial is going to benefit the people of the district. The 49 cents per $100 of assessed valuation comes out to an average property tax increase of $766 within the city of Ladue itself. (Hat tip to here for that number, though the rest of the piece is awful.) This is a lot of money to correct a mistake.