How Easton's Schools Can Balance The Budget

One of the things that's been standing in the way of faster job growth the past three years is state and local government layoffs.

464,000 public sector jobs have been cut since the recession started in December 2007.

Our economy has seen modest private sector job growth throughout 2011, but we've also been hemorrhaging public sector jobs so unemployment isn't going down.

Lately there have been some signs that we might see a real recovery in 2012 and 2013, but at least for another year, states, cities and school districts are going to continue to weaken the job market with more layoffs, spending cuts and tax increases.

The Easton Area School District is in for another tough budget season this year, staring down a .

The many newcomers on the board will have to make some difficult decisions about how to close the gap. Some of the choices,like raising property taxes or laying off teachers and administrators, could be politically explosive, but all of them seem likely to hurt job growth.

Fortunately, there are ways to balance the budget that will be less harmful to the job market, and could even help the local economy.

One possibility would be for the School District to sell monthly parking passes to students and staff to park in school parking lots.

Free parking at school is a subsidy to people who choose to get to school by car. Students who get to school by walking or taking the bus or public transportation do not receive this subsidy. This is a regressive transfer from low income families to higher-income families.

The school district is paying for the land now being used as parking lots. If fewer students and staff decided to drive to school because parking prices rose, some of the land now used for parking might be freed up for academic or recreational uses.

Another option that would help the economy would be to make the property tax less of a deterrent to development and property improvements.

With a simple tweak, EASD could convert its regressive real estate tax into one of the most progressive taxes there is.

Right now EASD collects most of its revenue from the real estate tax.

People use "real estate tax" and "property tax" interchangeably, but keep them separate in your mind because they're not really the same thing.

Real estate is land and structures. When you buy some real estate, you're buying a physical building, and you're making a speculative investment in the land the building is sitting on.

When the County conducts property assessments, they assess the value of the land and the value of the building separately.

, EASD and all choose to apply the same millage rate to land and buildings, which makes their real estate taxes more regressive, and more of a deterrent to property improvements.

Lots of PA municipalities and school districts have made their real estate taxes more progressive by taxing land at a higher rate than buildings, or totally doing away with the tax on property improvements. This is called a two-rate tax, or land value tax.

People with more unimproved land would pay more, and people whose properties occupy less land (think attached houses and working class neighborhoods with small lawns) would get a tax cut.

When the city of Allentown moved to the two-rate tax in 1996, three out of four taxpayers saw their tax burden go down.

This would be less harmful to the economy than EASD's regular real estate tax because it would shift more of the tax burden to vacant lot owners, people with blighted properties, and people who own large tracts of unimproved land. In the city of Easton, this would nicely complement Mayor Panto's and increase market pressure to develop vacant lots and surface parking lots.

Another idea would be for EASD to team up with other school districts on purchasing, especially for things like IT, computers, software, textbooks and office supplies. Buying in bulk and coordinating purchasing across school districts could lead to significant savings. Coordinating purchasing across state agencies in this way saves Pennsylvania over $300 million a year.

While we will probably have to endure another year of austerity budgeting by state and local governments, there's no excuse for lack of creativity. There are plenty of better ways to raise revenue and cut costs that promote job growth and investment instead of hurting the economy. The public is badly served by the two-dimensional debate between layoffs and property tax increases.