Every once in a while I meet an advocate for school district consolidation in New Jersey who uses Maryland as a beacon state for us to emulate, since Maryland's schools are just as high-performing as New Jersey's, less segregated, and significantly lower spending (and taxing).
Indeed. All of that is true.
If you could magically transport your typical New Jersey house to Maryland, your property taxes would fall from $8,477 to only $3,437. Your other taxes would be lower too: Maryland's sales tax is 6% compared to our 6.875%. Maryland's corporate tax is 8%, instead of 9%, too.
For state and local taxes combined, Maryland takes in less than New Jersey. Maryland's taxes equal 10.9% of income, whereas New Jersey's taxes equal 12.2% of income. To put it in terms of dollars per capita, Maryland's state and local taxes are only $5,920 per person. New Jersey's are $6,926. (see Table 2; corroboration E-1 to E-4)
Paradoxically, you get more for your taxes in Maryland for some services. If your kids went to a public college they'll have less debt than their peers in NJ, since Maryland's public higher education system gets 42% more money per capita than New Jersey's. Maryland lets people take out 529 profits tax-free. If you lose your job, Maryland's property tax "circuit breaker" will reduce your property taxes. You'll have the satisfaction of knowing that your state's bond rating is AAA, so you might feel more confident investing in Maryland too.
So how are Maryland's taxes so much lower?
The most obvious difference between Maryland and New Jersey is that Maryland has only 24 countywide districts whereas New Jersey has 586 town-based districts, but Maryland's school district consolidation versus New Jersey's fragmentation is just the tip of the iceberg as to why Maryland has lower property taxes than the Garden State.
The direct savings of Maryland's district consolidation - ie, less redundancy in administration - are minimal. It is in the indirect savings created by Maryland's consolidation - ie, less intense interdistrict spending competition - that produce the real savings.
This blog post will look at two under-discussed, and more significant, reasons why Maryland's property taxes are lower than New Jersey's:
1. Maryland localities have their own income taxes.
2. Maryland spends 22% less per student.
a. That lower spending is across-the-board.
i. There are several structural and political reasons for that lower spending.
A subsequent post will look at a third major reason:
3. Maryland gives more state aid to middle-class districts than New Jersey does.
-----------
The source of revenue doesn't make a district higher spending or lower spending, but technically speaking, one reason Maryland's property taxes are lower is because counties have a significant alternative source of revenue.
1. Maryland Localities Have Their Own Income Taxes
Maryland's average property tax rate is only 1.05, compared to New Jersey's 2.40. The Maryland jurisdiction with the highest property taxes, Baltimore City, only has a property tax rate of 2.248, which is below New Jersey's average. The Maryland jurisdiction the lowest property tax rate is Talbot County, which has a rate of 0.547.
New Jersey's property tax average is 2.4. NJ's highest all-in property taxes are more than double any place in Maryland - with Irvington at the top with a 4.9 rate.
Maryland's 1.05 average property tax is a lower tax rate than even the richest towns in New Jersey have. Millburn's tax rate is 1.8. Princeton's is 2.0. Madison's is 1.7. Franklin Lakes's is 1.5. Even Hoboken, with its $5.5 million in Adjustment Aid and proportionally small student population, still has a 1.3 tax rate. The only NJ towns in NJ with property taxes lower than 1.05 are resort towns at the Jersey Shore and wealthy enclaves like Alpine and Harding.
Maryland's county income taxes range from 1.75% to 3.2%, with 3.0%
as the median. Baltimore City, mentioned above for its high property tax, has a 3.2% income tax, so you would pay higher local taxes in Baltimore City than you would in most of New Jersey.
On average, Maryland localities get 34.8% of their taxes from income taxes, 53% from property taxes, and then 12% from "other taxes." (ie, liquor stores)
Aside from Baltimore City, Maryland's property taxes are so much lower than New Jersey's that most New Jerseyans would come out ahead despite the local income tax. A 3% median income tax is real money, but since Maryland's average property tax is $5,000 lower than New Jersey's, a family would have to make over $166,000 a year before it would pay higher Maryland local taxes than it would in New Jersey, assuming it lived in average-value houses. Since families making over $166,000 in New Jersey probably live in more expensive-than-average houses anyway and pay higher than the $8,477 average in property taxes, the crossover income point would be higher than $166,000 per year, unless those
families had lived well below their means back in Jersey.
Maryland's state income tax brackets are higher for people at low-incomes, but lower at average to
above-average incomes.
Maryland taxes income $4,000-$100,000 at a 4.75% rate. New Jersey has lower rates for low income filers, but NJ starts taxing at 5.525% at only $40,000 a year, then 6.37% at $75,000, and then at 8.97% $500,000.
Maryland's top bracket, 5.75%, kicks in at $250,000. Because Maryland's second-highest and higher brackets are so much lower than NJ's, Maryland collects less in income taxes per capita than NJ ($1,297 p capita versus $1,361 per capita) and Maryland's system is less reliant on its top 1%.
In terms of all state taxes, Maryland captures less than New Jersey, $3,172 per capita versus New Jersey's $3,325 per capita. (see E-12)
How Maryland developed an income tax-based system whereas New Jersey developed a property tax-based system is complicated, but Maryland had a forty year head start on NJ in state income taxes, enacting its own income tax in 1937, whereas New Jersey held out until 1976. Maryland also enacted a sales tax in 1947, versus New Jersey enacted its sales tax in 1966.
There isn't a federal ranking of states by cost of living, but many independent organizations put out their own rankings. The Missouri Fed ranks Maryland's cost of living as higher than New Jersey's. The Council for Community and Economic Research agrees and ranks Maryland higher in cost of living too.
Some sources rank New Jersey's cost of living higher, but the difference in cost of living is not proportional to the difference in school spending. For instance, the Tax Foundation says that $90.66 in Maryland would only buy $87.34 worth of the same goods and services in New Jersey. That's a difference, but not something that accounts for a 22% difference in school spending. Giving the closeness in the two states' cost of living, New Jersey's high education spending is due to political-judicial preference, not economic necessity.
Some would consider lower school spending a negative tradeoff, but Maryland's education performance is as high as New Jersey's, despite much lower spending. Since Maryland's schools perform about as well as New Jersey's (topping Education Week's rankings six years in a row), I would not consider the lower spending a tradeoff except in that Maryland offers less public PreK.
(It's worth pointing out that more Maryland children attend private school than New Jersey children and this might be considered a sign of dissatisfaction.
The percentage of Maryland children who attend public school is 85%, versus New Jersey's 89%. Since Maryland doesn't have as large an Orthodox Jewish population as New Jersey, we can assume that the gap in parents choosing private school for academic-social reasons and not religious reasons is even wider than 85%-89%. (see Figure 5)
I'm not saying that that parental dissatisfaction is justified, but it appears to exist.)
2a. Maryland's Spending is Lower than NJ's Across the Board
Many people attribute Maryland's lower spending to having fewer school districts, and thus less administration.
So Maryland's General Administration is $236 per student lower than New Jersey's. Maryland's lower General Administrative spending would translate to savings of $328 million, which is a large amount, but only a fraction of the NJ/MD spending difference.
Attributing Maryland's lower taxes to district consolidation and administrative efficiency is correct, but highly incomplete.
The most financially significant difference between Maryland and New Jersey is that Maryland has fewer teachers. NJ has 112,377 teachers, so a student:teacher ratio is 11.9:1, the second lowest in the US.
Maryland has 60,053 teachers, so a student:teacher ratio is 14.6:1, the 30th lowest in the US.
On top of Maryland having fewer teachers, it pays them less well, at an average salary of $66,456 versus New Jersey's $69,330.
I think the more significant relationship between having big districts is that those districts are socioeconomically diverse, and therefore there are no rich districts to bid up salaries which middle-class districts end up struggling to match. IE, Maryland does not have a "Millburn-Princeton Effect."
From an education point-of-view, Maryland's having fewer teachers and then paying those teachers less well is a negative, but from a taxpayer point-of-view having fewer teachers and lower salaries is a positive. Having fewer teachers is obviously a direct savings, but an indirect savings as well because the teachers union will be less powerful.
Why Maryland has lower school spending is a very complex matter, but I think the following are major reasons.
1. Maryland's teacher unions are less powerful than New Jersey's.
Maryland only gave teacher unions the power to impose agency fees in 2013, and this law hasn't gone into effect statewide because there are counties where too few teachers want to actually join the union to trigger implementation.
New Jersey gave its teacher unions the power to impose agency fees wayyyyy back in 1979.
The newness of mandatory agency fees means that union fees in Maryland have not climbed as high as they have in New Jersey. In 2014-15 the Maryland State Education Association had a budget of $21.6 million. By contrast, the NJEA had a budget of $134.4 million.
It is perhaps due to the NJEA's superior power that New Jersey teachers have post-retirement healthcare coverage, which doesn't exist statewide in Maryland. It is perhaps due to the NJEA's superior power that pensions in NJ are 100% a state obligation, versus a hybrid state-local obligation in Maryland. It is perhaps due to the NJEA's superior power that NJ pours so much more into PreK-12 education aid than it does into higher education.
2. Maryland has Far Fewer Students in Out-of-District Placement
New Jersey leads the nation in the percentage of special education students who are in out-of-district placement. Maryland's placement rate is also above the national average, but barely half of New Jersey's.
According to the most recent data I could find, 0.9% of NJ students are in Out-of-District placement, the highest of all states, versus only 0.47% of Maryland students, which is itself the 6th highest of states.
I do not have cost data for Out-of-District placement costs, but the spending difference must be in the hundreds of millions, both for tuition itself and transportation.
Maryland's having large districts may make feasible for districts to create specialized programs for kids that New Jersey's small districts cannot create, however, in Maryland the legal burden-of-proof is on the parents to prove that an in-district program is inadequate, whereas in New Jersey the legal burden-of-proof has been on the district to prove that a program is adequate.
In other words, in Maryland if there is a parent-district dispute, the special education program is assumed to be adequate, but in NJ if there is a dispute the special education program is assumed to be inadequate. Thus, it is very hard for a New Jersey district to win a lawsuit against parents who want their child in a private-school setting.
When a New Jersey district loses special education litigation, the district pays the other side's legal fees, thereby incentivizing the district to accede to the parents' demands before litigation begins.
3. Maryland does not have a "Princeton-Millburn Effect."
This is the large indirect benefit of having large, diverse districts.
Maryland has many rich towns, but it has no rich districts. If Maryland's rich towns like Chevy Chase, Potomac, Bethesda, and Ocean City had independent school districts they would surely spend huge amounts of their own money on their own children, but all of those towns are subsumed into big, diverse countywide school districts and therefore they can't spend as much as what Princeton, Livingston, Franklin Lakes, Millburn etc can.
The highest-income school district in Maryland is Howard County, whose median income is $110,238. That's a high income, but but only 3.1x higher than Maryland's poorest school district, Somerset, whose median income is $35,154. (see pg 96)
New Jersey has over 40 school districts with a higher median income than Howard County, and our ceiling is closer to $200,000 per year than $100,000.
By contrast, the richest K-12 school district in NJ (by income) is Millburn, whose income is $158,888, an amount that is 5.6x higher than Camden's $28,000.
In New Jersey, the existence of relatively small, affluent, high-spending districts like Princeton and Millburn has driven up overall education spending through what I will (semi-facetiously) call the "Princeton-Millburn Effect."
(Note: Millburn's spending has always been much lower than Princeton's, even though Millburn is wealthier.)
Residents of New Jersey's affluent districts have several reasons to accept higher taxes.
Indeed, even in the 1970s, New Jersey's property taxes were larger than all state revenue. In 1990, before the Abbott II decision transformed NJ state aid, New Jersey's all-in property tax rate was 2.0, a figure I believe was the highest in the US.
The secondary Princeton-Millburn Effect is through compensatory state aid, since the existence of high-spending, affluent districts has forced the state to devote massive amounts of income tax revenue to state aid for the Abbott districts in order to equalize spending with affluent suburbs. By 2006 22 of the country's 30 highest spending districts in the United States were Abbotts and New Jersey had a U-shaped spending pattern, where poor, urban districts and affluent towns spent the most. High-spending in the Abbotts added to affluent districts' upwards pressure on spending.
4. In Maryland County Councils and Executives Set School Taxes, Not Boards of Education
Maryland school districts are "dependent districts," meaning they do not have their own taxing authority.
Maryland school districts get their money from the county governments they are part of. The county council and executive determine how much money the school districts will have, not the Boards of Education.
County councils, I would think, would be more taxpayer-sensitive than Boards of Education are, who see their primary responsibility to do what is best for students, not taxpayers.
Maryland has lower taxes on its middle-class residents because Maryland's middle-class districts get more state aid than their equivalents do in New Jersey.
State aid is a highly complex subject in which interstate comparisons are tricky. New Jersey has more streams of indirect aid than Maryland does and New Jersey state aid is badly off-formula. Part 2 of this series addresses state aid.
For state and local taxes combined, Maryland takes in less than New Jersey. Maryland's taxes equal 10.9% of income, whereas New Jersey's taxes equal 12.2% of income. To put it in terms of dollars per capita, Maryland's state and local taxes are only $5,920 per person. New Jersey's are $6,926. (see Table 2; corroboration E-1 to E-4)
Paradoxically, you get more for your taxes in Maryland for some services. If your kids went to a public college they'll have less debt than their peers in NJ, since Maryland's public higher education system gets 42% more money per capita than New Jersey's. Maryland lets people take out 529 profits tax-free. If you lose your job, Maryland's property tax "circuit breaker" will reduce your property taxes. You'll have the satisfaction of knowing that your state's bond rating is AAA, so you might feel more confident investing in Maryland too.
So how are Maryland's taxes so much lower?
The most obvious difference between Maryland and New Jersey is that Maryland has only 24 countywide districts whereas New Jersey has 586 town-based districts, but Maryland's school district consolidation versus New Jersey's fragmentation is just the tip of the iceberg as to why Maryland has lower property taxes than the Garden State.
The direct savings of Maryland's district consolidation - ie, less redundancy in administration - are minimal. It is in the indirect savings created by Maryland's consolidation - ie, less intense interdistrict spending competition - that produce the real savings.
This blog post will look at two under-discussed, and more significant, reasons why Maryland's property taxes are lower than New Jersey's:
1. Maryland localities have their own income taxes.
2. Maryland spends 22% less per student.
a. That lower spending is across-the-board.
i. There are several structural and political reasons for that lower spending.
A subsequent post will look at a third major reason:
3. Maryland gives more state aid to middle-class districts than New Jersey does.
-----------
The source of revenue doesn't make a district higher spending or lower spending, but technically speaking, one reason Maryland's property taxes are lower is because counties have a significant alternative source of revenue.
Maryland's average property tax rate is only 1.05, compared to New Jersey's 2.40. The Maryland jurisdiction with the highest property taxes, Baltimore City, only has a property tax rate of 2.248, which is below New Jersey's average. The Maryland jurisdiction the lowest property tax rate is Talbot County, which has a rate of 0.547.
New Jersey's property tax average is 2.4. NJ's highest all-in property taxes are more than double any place in Maryland - with Irvington at the top with a 4.9 rate.
Maryland's 1.05 average property tax is a lower tax rate than even the richest towns in New Jersey have. Millburn's tax rate is 1.8. Princeton's is 2.0. Madison's is 1.7. Franklin Lakes's is 1.5. Even Hoboken, with its $5.5 million in Adjustment Aid and proportionally small student population, still has a 1.3 tax rate. The only NJ towns in NJ with property taxes lower than 1.05 are resort towns at the Jersey Shore and wealthy enclaves like Alpine and Harding.
Maryland's county income taxes range from 1.75% to 3.2%, with 3.0%
 |
| Source, pg 28 |
On average, Maryland localities get 34.8% of their taxes from income taxes, 53% from property taxes, and then 12% from "other taxes." (ie, liquor stores)
Aside from Baltimore City, Maryland's property taxes are so much lower than New Jersey's that most New Jerseyans would come out ahead despite the local income tax. A 3% median income tax is real money, but since Maryland's average property tax is $5,000 lower than New Jersey's, a family would have to make over $166,000 a year before it would pay higher Maryland local taxes than it would in New Jersey, assuming it lived in average-value houses. Since families making over $166,000 in New Jersey probably live in more expensive-than-average houses anyway and pay higher than the $8,477 average in property taxes, the crossover income point would be higher than $166,000 per year, unless those
.jpg)
Maryland's state income tax brackets are higher for people at low-incomes, but lower at average to
above-average incomes.
Maryland taxes income $4,000-$100,000 at a 4.75% rate. New Jersey has lower rates for low income filers, but NJ starts taxing at 5.525% at only $40,000 a year, then 6.37% at $75,000, and then at 8.97% $500,000.
Maryland's top bracket, 5.75%, kicks in at $250,000. Because Maryland's second-highest and higher brackets are so much lower than NJ's, Maryland collects less in income taxes per capita than NJ ($1,297 p capita versus $1,361 per capita) and Maryland's system is less reliant on its top 1%.
In terms of all state taxes, Maryland captures less than New Jersey, $3,172 per capita versus New Jersey's $3,325 per capita. (see E-12)
How Maryland developed an income tax-based system whereas New Jersey developed a property tax-based system is complicated, but Maryland had a forty year head start on NJ in state income taxes, enacting its own income tax in 1937, whereas New Jersey held out until 1976. Maryland also enacted a sales tax in 1947, versus New Jersey enacted its sales tax in 1966.
2. Maryland's Taxes are Lower Because School Spending is 22% Lower than New Jersey's
Maryland's property taxes are lower than New Jersey's because it has local income taxes, but another major factor is that Maryland's PreK-12 schools spend so 22% less per student than New Jersey's. New Jersey's spending is $21,243 per student, compared to Maryland's $16,985 per student, a difference of $4,258 per student. (see Table F-1)
If New Jersey spent as much as Maryland on PreK-12 schools, we would save $5.9 billion. At savings at that level, we would have no pension crisis, no NJTransit crisis, no underfunded higher ed, and have enough money left over to lower taxes.
Maryland's spending is also significantly lower in terms of spending as a percentage of State GDP.
Maryland's lower school spending exists despite its cost of living being the same or higher than New Jersey's.
Maryland's property taxes are lower than New Jersey's because it has local income taxes, but another major factor is that Maryland's PreK-12 schools spend so 22% less per student than New Jersey's. New Jersey's spending is $21,243 per student, compared to Maryland's $16,985 per student, a difference of $4,258 per student. (see Table F-1)
If New Jersey spent as much as Maryland on PreK-12 schools, we would save $5.9 billion. At savings at that level, we would have no pension crisis, no NJTransit crisis, no underfunded higher ed, and have enough money left over to lower taxes.
 |
| Source, NEA Rankings & Estimates, Table F-1, 2016. http://www.nea.org/assets/docs/2017_Rankings_and_Estimates_Report-FINAL-SECURED.pdf |
Maryland's spending is also significantly lower in terms of spending as a percentage of State GDP.
 |
| Source, Figure 3. "Median" refers to the national median. https://drive.google.com/file/d/0BxtYmwryVI00VDhjRGlDOUh3VE0/view |
Maryland's lower school spending exists despite its cost of living being the same or higher than New Jersey's.
Some sources rank New Jersey's cost of living higher, but the difference in cost of living is not proportional to the difference in school spending. For instance, the Tax Foundation says that $90.66 in Maryland would only buy $87.34 worth of the same goods and services in New Jersey. That's a difference, but not something that accounts for a 22% difference in school spending. Giving the closeness in the two states' cost of living, New Jersey's high education spending is due to political-judicial preference, not economic necessity.
Some would consider lower school spending a negative tradeoff, but Maryland's education performance is as high as New Jersey's, despite much lower spending. Since Maryland's schools perform about as well as New Jersey's (topping Education Week's rankings six years in a row), I would not consider the lower spending a tradeoff except in that Maryland offers less public PreK.
(It's worth pointing out that more Maryland children attend private school than New Jersey children and this might be considered a sign of dissatisfaction.
The percentage of Maryland children who attend public school is 85%, versus New Jersey's 89%. Since Maryland doesn't have as large an Orthodox Jewish population as New Jersey, we can assume that the gap in parents choosing private school for academic-social reasons and not religious reasons is even wider than 85%-89%. (see Figure 5)
I'm not saying that that parental dissatisfaction is justified, but it appears to exist.)
2a. Maryland's Spending is Lower than NJ's Across the Board
Many people attribute Maryland's lower spending to having fewer school districts, and thus less administration.
- Maryland has 24 school districts for 874,514 students, or one district per 36,438 students.
- New Jersey has 590 school districts for 1,347,166 students, or one district per 2,283 students.
 |
| Source: Table 7 https://www.census.gov/library/publications/2017/econ/g15-aspef.html |
So Maryland's General Administration is $236 per student lower than New Jersey's. Maryland's lower General Administrative spending would translate to savings of $328 million, which is a large amount, but only a fraction of the NJ/MD spending difference.
Attributing Maryland's lower taxes to district consolidation and administrative efficiency is correct, but highly incomplete.
The most financially significant difference between Maryland and New Jersey is that Maryland has fewer teachers. NJ has 112,377 teachers, so a student:teacher ratio is 11.9:1, the second lowest in the US.
Maryland has 60,053 teachers, so a student:teacher ratio is 14.6:1, the 30th lowest in the US.
On top of Maryland having fewer teachers, it pays them less well, at an average salary of $66,456 versus New Jersey's $69,330.
I think the more significant relationship between having big districts is that those districts are socioeconomically diverse, and therefore there are no rich districts to bid up salaries which middle-class districts end up struggling to match. IE, Maryland does not have a "Millburn-Princeton Effect."
From an education point-of-view, Maryland's having fewer teachers and then paying those teachers less well is a negative, but from a taxpayer point-of-view having fewer teachers and lower salaries is a positive. Having fewer teachers is obviously a direct savings, but an indirect savings as well because the teachers union will be less powerful.
i: there are many reasons for MD's lower spending
1. Maryland's teacher unions are less powerful than New Jersey's.
Maryland only gave teacher unions the power to impose agency fees in 2013, and this law hasn't gone into effect statewide because there are counties where too few teachers want to actually join the union to trigger implementation.
New Jersey gave its teacher unions the power to impose agency fees wayyyyy back in 1979.
The newness of mandatory agency fees means that union fees in Maryland have not climbed as high as they have in New Jersey. In 2014-15 the Maryland State Education Association had a budget of $21.6 million. By contrast, the NJEA had a budget of $134.4 million.
It is perhaps due to the NJEA's superior power that New Jersey teachers have post-retirement healthcare coverage, which doesn't exist statewide in Maryland. It is perhaps due to the NJEA's superior power that pensions in NJ are 100% a state obligation, versus a hybrid state-local obligation in Maryland. It is perhaps due to the NJEA's superior power that NJ pours so much more into PreK-12 education aid than it does into higher education.
2. Maryland has Far Fewer Students in Out-of-District Placement
New Jersey leads the nation in the percentage of special education students who are in out-of-district placement. Maryland's placement rate is also above the national average, but barely half of New Jersey's.
According to the most recent data I could find, 0.9% of NJ students are in Out-of-District placement, the highest of all states, versus only 0.47% of Maryland students, which is itself the 6th highest of states.
I do not have cost data for Out-of-District placement costs, but the spending difference must be in the hundreds of millions, both for tuition itself and transportation.
Maryland's having large districts may make feasible for districts to create specialized programs for kids that New Jersey's small districts cannot create, however, in Maryland the legal burden-of-proof is on the parents to prove that an in-district program is inadequate, whereas in New Jersey the legal burden-of-proof has been on the district to prove that a program is adequate.
In other words, in Maryland if there is a parent-district dispute, the special education program is assumed to be adequate, but in NJ if there is a dispute the special education program is assumed to be inadequate. Thus, it is very hard for a New Jersey district to win a lawsuit against parents who want their child in a private-school setting.
When a New Jersey district loses special education litigation, the district pays the other side's legal fees, thereby incentivizing the district to accede to the parents' demands before litigation begins.
3. Maryland does not have a "Princeton-Millburn Effect."
This is the large indirect benefit of having large, diverse districts.
Maryland has many rich towns, but it has no rich districts. If Maryland's rich towns like Chevy Chase, Potomac, Bethesda, and Ocean City had independent school districts they would surely spend huge amounts of their own money on their own children, but all of those towns are subsumed into big, diverse countywide school districts and therefore they can't spend as much as what Princeton, Livingston, Franklin Lakes, Millburn etc can.
The highest-income school district in Maryland is Howard County, whose median income is $110,238. That's a high income, but but only 3.1x higher than Maryland's poorest school district, Somerset, whose median income is $35,154. (see pg 96)
New Jersey has over 40 school districts with a higher median income than Howard County, and our ceiling is closer to $200,000 per year than $100,000.
By contrast, the richest K-12 school district in NJ (by income) is Millburn, whose income is $158,888, an amount that is 5.6x higher than Camden's $28,000.
The richest district in Maryland by tax base per student is Worchester County (on the Atlantic Ocean), but Worchester is only 4.1x richer than Maryland's poorest district by tax base, Caroline County.
Likewise, New Jersey's tax base differential is wider too. Millburn's tax base per student is 18.6x higher than Camden's, but Millburn's tax base is nothing compared to microdistricts at the Jersey Shore. Deal, which was cited in the Robinson v Cahill decision as an example of tax rate injustice, has a tax base per student that is 6.5x Millburn's and 121x than Camden's.
Even though Maryland and New Jersey are peers in income on a statewide basis, Maryland has no rich districts like New Jersey has. One Maryland expert I talked to said that Montgomery County competed more against Washington, DC than it did against any other county in Maryland.
Even though Maryland and New Jersey are peers in income on a statewide basis, Maryland has no rich districts like New Jersey has. One Maryland expert I talked to said that Montgomery County competed more against Washington, DC than it did against any other county in Maryland.
In New Jersey, the existence of relatively small, affluent, high-spending districts like Princeton and Millburn has driven up overall education spending through what I will (semi-facetiously) call the "Princeton-Millburn Effect."
(Note: Millburn's spending has always been much lower than Princeton's, even though Millburn is wealthier.)
Residents of New Jersey's affluent districts have several reasons to accept higher taxes.
- One, high taxes in small towns give concentrated benefit to the children of that town, whereas in Maryland having big districts means that the benefits of high-spending are diffuse and that extra money may even go to high-poverty schools within that county.
- Two, many people in high-income districts sincerely believe that high-spending = good schools and good schools= higher property values for that town, whereas in Maryland people would be less likely to believe this due to how large districts are and how diffuse any higher spending would be.
Indeed, even in the 1970s, New Jersey's property taxes were larger than all state revenue. In 1990, before the Abbott II decision transformed NJ state aid, New Jersey's all-in property tax rate was 2.0, a figure I believe was the highest in the US.
The secondary Princeton-Millburn Effect is through compensatory state aid, since the existence of high-spending, affluent districts has forced the state to devote massive amounts of income tax revenue to state aid for the Abbott districts in order to equalize spending with affluent suburbs. By 2006 22 of the country's 30 highest spending districts in the United States were Abbotts and New Jersey had a U-shaped spending pattern, where poor, urban districts and affluent towns spent the most. High-spending in the Abbotts added to affluent districts' upwards pressure on spending.
4. In Maryland County Councils and Executives Set School Taxes, Not Boards of Education
Maryland school districts are "dependent districts," meaning they do not have their own taxing authority.
Maryland school districts get their money from the county governments they are part of. The county council and executive determine how much money the school districts will have, not the Boards of Education.
County councils, I would think, would be more taxpayer-sensitive than Boards of Education are, who see their primary responsibility to do what is best for students, not taxpayers.
----------
Part 2: State Aid
Maryland has lower taxes on its middle-class residents because Maryland's middle-class districts get more state aid than their equivalents do in New Jersey.
State aid is a highly complex subject in which interstate comparisons are tricky. New Jersey has more streams of indirect aid than Maryland does and New Jersey state aid is badly off-formula. Part 2 of this series addresses state aid.
No comments:
Post a Comment