Michigan 'Robin Hood' school plan is upheld, but court has misgivings about its penalties.

CHICAGO -- A Macomb County, Mich., Circuit Court has ruled in favor of Michigan's plan for equalizing state funding of schools by making districts share their tax bases.

The decision, issued last week by Judge Lido Bucci, cast doubt on penalties used to enforce the plan. But Bucci upheld as "proper" the program's so-called Robin Hood concept of tax-base sharing, or taking funds from richer school districts and giving them to poorer ones.

Michigan lawmakers and Gov. John Engler in October 1991 approved a law that requires the state's 170 richest school districts to share up to half their annual growth in tax collections from commercial and industrial property with the state's remaining 390 school districts.

The Macomb County Taxpayers Association filed a lawsuit in November 1991 charging that tax-base sharing violated the so-called Headlee Amendment to the state constitution. A provision in the amendment prohibits creation of a new tax without a vote of the people.

Last week, Judge Bucci ruled that "it is not the function of the court to second-guess the Legislature's determination that there is a serious problem with school district funding, and tax-base sharing is the appropriate answer to this problem."

However, the judge ruled unconstitutional a part of the law that would have allowed a cutoff of state aid to school districts that do not participate in tax-base sharing. State funding for programs mandated by the state, such as special education and bilingual education, cannot be touched under the Headlee Amendment, Bucci wrote.

And the judge said further review was needed for a provision of the law that enables the state to reduce the maximum amount of property taxes a school district can levy. A hearing on that matter is set for Dec. 29.

Nick Khouri, the state's chief deputy treasurer, called the Macomb County Court decision an "80% victory for proponents" of tax-base sharing.

Rep. James O'Neill, D-Saginaw, who was a co-sponsor of the law, said the decision was "clearly a victory" for the policy. He added that the law will begin narrowing disparities between rich and poor districts.

"I'm not saying tax-base sharing is the answer, but it's a step in the right direction," O'Neill said.

However, John Chmura, attorney for the taxpayers group, said the decision's restrictions on penalties "knocked the teeth" out of the law. "Clearly the state can't do very much," he said.

But the taxpayers group intends to appeal the decision because the ruling supports the concept of tax-base sharing, Chmura said.

Similar suits against the state's tax-base sharing plan are pending in Wayne and Grand Traverse counties, according to Chris DeWitt, spokesman for the Michigan attorney general's office.

Supporters of tax-base sharing have said the law's aim was to narrow the differences between annual per pupil funding among Michigan school districts, which now range between $2,500 and $9,000. The law exempts property tax levies dedicated for debt service from redistribution.

Like other states, Michigan has faced legal challenges by school and other groups to force more equalized funding of schools. So far those challenges have been unsuccessful.

In February, Engler proposed repealing the tax-base sharing law that he signed because of the controversy over the issue. John Truscott, spokesman for Engler, said that lawmakers in June agreed to suspend the law during fiscal 1993, which began Oct. 1, because of the lawsuit.

Truscott added that Engler expects to unveil his own school funding plan by late February. The plan would tap future increases in general fund revenues, such as sales tax and lottery proceeds, and distribute them to the poorer districts, Truscott said.

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