The Recht Decision

Charleston Daily Mail
May 14, 1982

School Funds Ruling Outrages State Officials

Chief of the Capitol Bureau

House Speaker Clyde See predicted the Legislature would ask voters to amend the state Constitution before it would approve massive property tax increases implied in a court ruling today.

Circuit Judge Arthur Recht of Wheeling handed down the long-awaited opinion today which strikes down West Virginia's system of financing schools. The judge said the state's system is "outrageous" and fails to tap a large portion of the state's wealth for school support.

High-ranking officials said today they were angered and astonished by the ruling in the case, which was filed on behalf of Janet Pauley and other Lincoln County parents who felt their children were being deprived of an adequate education.

House Finance Chairman Charles Polan, D-Cabell, warned that West Virginia taxpayers would have their own "Proposition 13," modeled on the revolt a few years ago by Californians.

Gov. Rockefeller said the decision will mean "enormous increases in taxes for all West Virginians." The governor said he needs to study the opinion before making recommendations.

See, a Hardy County Democrat, said: "There are 70,000 people out of work in this state, and we're going to raise their taxes? No way. We're having a heck of a time keeping businesses in the state. This just drives another nail into the coffin."

Attorney General Chauncey Browning, whose staff defended the state, said he was distressed:

"We have a court deciding how much money our citizens should spend on the school system. Our educational expenditures now total nearly 50 percent of our state budget," Browning said. "Estimates of the cost for implementing these new funding changes range in the hundreds of millions of dollars annually. We all want a good school system. But in recent years the citizens of county after county have turned down school levies, indicating they are satisfied with the present system."

Browning said he would have to study Judge Recht's 244-page order before deciding whether to appeal.

Judge Recht, who was appointed by Rockefeller to fill a vacancy last year on the Ohio County bench, said in the ruling that the state Tax Department should take a greater role in setting local property taxes.

Speaker See said that may be unconstitutional. "You are, in essence, going to have an appointed official in Charleston [the tax commissioner] raising people's taxes. There is no way we'll stand for that. If necessary, I know that I, for one, will look at ways to amend the Constitution."

Judge Recht's ruling said, "The root of the failure of the tax commissioner to insure that . . . is properly assessed is within the commissioner's perception of his passive participation in the assessment process."

And, he said, "the conclusion is inescapable that the absence of a thorough and efficient system of education in West Virginia is directly related to property wealth and the failure of the Legislature to provide a sufficient financial base."

Polan said he is astonished at the remedy proposed by the judge. Using property taxes to fund education contradicts a national trend, he said.

Tax Commissioner Herschel Rose III said the decision could have a sweeping effect on all classes of property and could raise residential property taxes as much as 600 percent.

Judge Recht essentially ordered the Legislature to come up with a system that would equalize the rate of taxation across all 55 counties.

Speaker See said that Judge Recht's decision may have been a "blessing in disguise." He said it may show clearly to the people "what the judiciary is trying to do to us in this state."

"Let's face it, property taxes represent the only break West Virginians get," he said.

Polan said residential taxpayers will get hurt the most, because residential taxes have been held the lowest. He attributes that to local political pressure. "I'm quite surprised that a judge would try to weaken that. It isn't a fiscally sound thing to do and it isn't a politically sound thing to do. It sounds to me like the court bit off a real hunk. We may be looking at a revolt from the people. They can't pay it if they don't have it."

Kanawha County Assessor G. Kemp Melton said Judge Recht's decision will cause "tremendous reverberations from the entire state."

Putnam County Assessor Jack Fewell said he dislikes the decision immensely and predicted a taxpayers revolt. "It eliminates the assessor in every county. It's no good to do away with local controls. Something better be done to the constitution to stop this, or people will revolt."

However, Sen. Bobby Nelson, D-Cabell, endorsed Judge Recht's decision:

"Good, good," he said. "Those of us who have been involved with school financing have had no doubt that this would be his decision."

But Senate Education Chairman Si Galperin, D-Kanawha, had mixed feelings. He said he liked the idea of mandating an efficient system of education but swallowed hard at the millions of dollars it would cost.

Senate President Warren McGraw, D-Wyoming, couldn't be reached for comment.

Although the decision does not specify an alternative to the state's four-pronged method of paying for education, it does call for:

- Development of a master plan for a "thorough and efficient" system of education. That must be done within 120 days. Legislators say this could result in another special session this summer.

- Appointment of a special commissioner to oversee development of the master plan, which lawmakers said could usurp authority away from the state and local boards of education.

- Development by the state tax commissioner of a plan to overcome deficiencies in the state tax structure. The plan, which must include a computerized system of updating appraisals, must be completed within 90 days. Commissioner Rose said he thinks his department can meet that deadline, because the office has been updating appraisals for several years.

The original suit filed on Mrs. Pauley's behalf was dismissed. But the state Supreme Court overruled that decision in 1979 and ordered the trial to proceed. It ruled that a clause in the state Constitution requiring "thorough and efficient" schools meant the development of high standards.

The high court also ruled that paying for education was second in priority only to payment of the state debt, and was more important than another other functions. Judge Recht, who normally holds court in Hancock, Ohio and Brooke counties, then was given the suit for further development of certain issues.

Judge Recht said that the Tax Department does not provide formulas, standards, or meaningful guidelines for the assessment of many types of property. For example, he said the department has no appraisal of oil- and gas-producing properties for oil and gas reserves; none for timber reserves; none for limestone, dolomite, clay or other minerals; and none for "intangibles and other personal property" except machinery and equipment.

"There is no procedure for updating of coal appraisals; there is no procedure for updating at all for oil and gas, therefore, no updating; there is no routinized procedure for the updating of residential and commercial real property appraisals; there are no guidelines or procedures for the annual updating of industrial and commercial personal property appraisals," he said.

The judge was critical of the excess levy, one of the four methods of paying for education in West Virginia. In 1979-80, excess levies represented 47 percent of local tax revenues. Yet, Judge Recht wrote, the excess levy is the "primary cause of the inability of many counties to meet their educational needs because the amount of money that can be raised, and is raised, varies in large degrees based upon the amount and type of local property wealth of the county."

Judge Recht said the issuance of bonds to finance building construction also was dependent on local property wealth.

Judge Recht's decision spelled out what testimony in the case had indicated were high quality educational standards. He dismissed the state Department of Education's "standards for educational quality" as ineffective. "The very fact that this document makes a county's program dependent on available resources effectively destroys any expectation of developing high quality standards," he wrote.


West Virginia Archives and History