Day: March 28, 2012

What do you think about our state’s shiny new education funding formula? Neither Woonsocket nor Pawtucket are big fans and they are headed to a court date next month with the RI Department of Education (RIDE) over it.

Using measures that used to be part of the funding formula, these two cities are taxed more heavily than any other city or town in the state, save only Providence and Central Falls.  But RIDE only suggests they raise taxes more instead of counting on state aid.

To great fanfare in 2010, the legislature enacted a new funding formula to dictate how much state money is shared with the state’s cities and towns.  The new funding formula was widely praised for taking the uncertainty out of education funding for the state’s school districts.  There are a couple of problems, though.

The first, and biggest is simply that the funding formula does not provide enough money to the places that need it the most.  The school committees of Woonsocket and Pawtucket have filed a suit against the state over the adequacy of the funding for education.  In a fairly catty reply to press coverage of the suit, RIDE put out a packet of graphs showing that over the past 10 years, Providence tax collections have risen repeatedly while Pawtucket and Woonsocket have not.  RIDE calculated that if Woonsocket and Pawtucket had increased their tax levy by as much as Providence had, Pawtucket would have $2000 per student more to pay for education, and Woonsocket $1240 more.

The clear message: Providence has done what it takes, and raised taxes substantially over the past 15 years and Woonsocket and Pawtucket have not.  What a bunch of slackers, right?  Maybe the supplemental tax under consideration in Woonsocket to fill their budget hole is just catching up for a decade of bad behavior?

Of course the problem with the RIDE data is that Woonsocket and Pawtucket were already heavily taxed 15 years ago.  All this data shows is what the increase in taxes has been.  How heavy are the taxes in those cities?  Has that changed in the last 20 years?

There is a better way to look at this.  A number called “Tax Capacity” measures the relative wealth of cities and towns, and another number called “Tax Effort” measures the amount of that wealth that is actually taxed.  These numbers used to be part of the funding formula — the version that was ignored during the last 15 years — and their definition is in state law (16-7.1-6).  RIDE publishes these numbers on their Infoworks web site, but they use the 2008 data, and several of the values are wrong, possibly typographical errors.  (The errors have been brought to RIDE’s attention, but they have neither defended the numbers nor changed them.)

But with the formula laid out in state law, anyone can calculate tax capacity and tax effort, so here they are, using 2010 and 1990 data, ranked by 2010 tax effort.

(The 1990 data is from the 1992 “Annual State Report on Local Government and Finance” put out by what was to become the Office of Municipal Finance.  The 2010 levy data was provided to me by OMA and the assessment data is at muni-info.ri.gov.  I also used census data from 1990 and 2010.)

What you see from this table is that Woonsocket and Pawtucket were already among the most heavily taxed towns in the state in 1990.

These are relative numbers, where 100 is the state average in each column, so you can’t compare the 1990 to the 2010 numbers directly, but you can look at the growth of the indicators behind them.

Between 1990 and 2010, the assessed value of property in Woonsocket, equalized and weighted according to another formula in state law so one town can be compared with another despite differences in assessment calendars and practice (it’s called EWAV, and it includes an adjustment for the town’s median income) rose more slowly in Pawtucket and Woonsocket than in any other municipality in the state, an annual rate of 3.8% for Pawtucket and 3.86% for Woonsocket.  Over those same 20 years, the EWAV values in Providence rose an average of 4.8% each year.  By comparison, Warwick saw growth of 6.3% per year, and Portsmouth saw 9.0%.

Here’s the data (EWAV is in thousands):

In other words, not only were Pawtucket and Woonsocket among the most heavily taxed communities in the state in 1990, but over the last two decades they had less growth in their capacity to levy taxes than any other town in the state — including Central Falls.  Providence raised more money over the last two decades than either town, but they also saw substantially higher growth in their capacity to do so.

It’s easy to cluck one’s tongue about the slackers in Woonsocket and Pawtucket, but the evidence is that those city governments may have known something about their cities that the data crunchers at RIDE don’t.