In June, the U.S. Supreme Court ruled in South Dakota v. Wayfair Inc. that states can collect sales taxes from out-of-state vendors, paving the way for Michigan to collect the 6 percent sales taxes from online stores that don’t have a physical presence in the state. While this has been touted as new revenue, it actually gives Michigan the ability to collect this tax on products that have avoided it by being sold online.
This is very good news for the state’s bottom line and for school districts. Treasury has estimated this court ruling could bring more than $200 million back into our sales tax revenue. Recall that Michigan collects 6 cents of sales tax. Of that 6 cents, 2 cents are constitutionally dedicated to the School Aid Fund from the passage of Proposal A in 1994 and 60 percent of the remaining 4 cents is also constitutionally dedicated to the School Aid Fund.
Also, the Constitution requires 15 percent of the 4 cents to be dedicated to revenue sharing for Michigan’s townships, cities and villages. The remaining 25 percent of the 4 cents is allocated to the state’s General Fund with a few smaller earmarks included.
Voters expect those revenues to support those services, but already we’ve heard from the governor’s office that these sales tax dollars should go toward other priorities; specifically, the Snyder administration is looking to divert those monies to roads. While we appreciate the need for infrastructure investments, those improvements should not come on the back of the K-12 education system. There’s too much at stake for Michigan’s children.
Study after study points to the need to invest considerably in services like special education, at-risk programming, retirement obligations, school safety and student mental health. Michigan leaders should take this opportunity to infuse this much-needed revenue into these essential services and work to improve student achievement.
This scenario has played out over and over. Revenue that’s destined for the classroom ends up being diverted for other causes. A recent report from the Michigan League for Public Policy identifies more than $4.5 billion that was earmarked for K-12 classrooms that has made its way into other parts of the state budget. Michiganians are tired of the bait-and-switch tactics of the past and are eager to these dollars invested as intended — in the classroom.
We urge lawmakers to continue to make education a priority in our state and not lose sight of the goal of becoming a top 10 education state.
Chris Wigent is executive director of the Michigan Association of Superintendents and Administrators.
Don Wotruba is executive director of the Michigan Association of School Boards.
This commentary appeared in the Detroit News on Sept. 3, 2018: https://detne.ws/2NJMeiK.