Money is fungible.
This fact appears to have escaped the backers of a margins tax on businesses that is supposed to raise money for K-12 education. The measure is on the November 2014 ballot.
The Nevada State Education Association teachers’ union estimates the tax would raise $800 million a year, a contention business leaders seriously doubt.
But furthermore, the ballot initiative contains no language that would prevent the Legislature from simply taking tax money that currently goes to education and spending it elsewhere — the very definition of fungible, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.
“The only two things in the initiative that specify education is the title, which says ‘education first,’ and then the fact the initiative requires the money to be deposited in the DSA (Distributive School Account),” says Carole Vilardo, president of the Nevada Taxpayers Association. “There is no language in the initiative that says the money must go to education or that existing revenue that goes to education cannot be supplanted.”
Vilardo noted that a 3 percent tax on hotel rooms in Clark and Washoe counties was earmarked to improve student achievement and increase teacher salaries.
“The Legislature turned around and changed the use of the revenue. It went to the general fund the first year, and then it went into the DSA. It was to come out of the DSA for July 1st of 2011 (and go into a special education support fund). In the 2011 session it was delayed until July 1st of 2013. In the last session it was further deferred to July 1st of 2015.”
“This is what scares me about this upcoming election,” said Kelly Bullis, head of a Carson City certified public accounting firm. “I don’t think the average low-information voter is going to get this. The way this law is written, the money that is collected from this tax is put in the general fund that’s marked for education. What that means is that big pot that the Legislature basically has, this general fund, that they move stuff around. That’s what they vote on every two years. If you already have a lot of money in the education fund, then they don’t need to take money from something else to put in the education fund.”
The legislature could even decrease education funding and there is nothing in the margins tax initiative to stop it, Vilardo said.