December 10, 2018
- Dave Bieter
- Chad Bell
- Tom Dale
- Tammy de Weerd
- John Evans
- Debbie Kling
- Stan Ridgeway
- Joe Stear
- Darin Taylor
Staff and Guests
- Erik Exline – West Ada School District
- Jess Harrison – Association of Idaho Cities
- Mike Vuittonet – West Ada School District
- Bill Larsen – TVP
Welcome and Introductions
Tammy welcomed everyone to the Idaho College of Osteopathic Medicine. She introduced Eric and Mike with the West Ada School District. They are here to talk a proposal they would like to introduce to the Legislature. She felt it was important that the Partnership learn about this proposal which has been presented to the Idaho School Board Association.
She thinks that with all of our communities and the growth we are experiencing, we will continue to hear about public schools and property taxes, and the burden that school bond levies have on property taxes. They have been working on this for several years.
School Bond Debt Tax Relief Is It Possible?
Mike said it is no secret that we are growing. In the West Ada School District alone they estimate they could be up to 75,000 kids where they currently stand at 40,000 kids. They have been talking for a long time on how to reduce the tax burden on the homeowners. Every school that is being built places the burden on the homeowner.
They have been pondering the question, what if the State had a matching fund to be able to match 50% of whatever any bond levy was. They did a study over the last 20 years and there were $2 billion in bonds and another $1 billion in interest. With a 50% match applied to each and every bond over the years, the overall savings to the taxpayer would be $1.485 billion. This would have only cost the state $50 million a year to provide a 50% matching fund.
Their figures show that in the West Ada District alone, they could lower the property tax rate by $300 per year on a medium-priced house.
In essence, it is a very simple concept. They want the State to match 50% of any bond levy ask, so if you are asking for $6 million in your levy request, the State match would be $3 million.
The match would be for infrastructure needs as a result of growth and also for Safe Schools which has been a real issue in rural Idaho. A lot of these small districts have not been able to pass bonds to fix their decaying buildings.
Eric said the biggest financial benefit is that bonds are just like home mortgages. They are really expensive. You borrow a dollar and pay another 50 cents back in interest.
Dave asked what the effects were of Governor Rich’s actions. Eric said they took the local support that was property tax funded ($300 for $100,000) away in the name of property tax relief and they supplemented this with a 1 cent increase in the sales tax.
Tom said, the reason we have most school bonds is to build new buildings because of growth. Schools are the only political entity that are not allowed to assess impact fees on new growth. He would like us to put more effort to change the code a little to allow new growth to pay for new schools through impact fees. Almost every other state allows this.
Eric said that they have tried to accomplish this. However, the realtors and construction people hate it and as a result, they have never been able to get this out of committee.
Mike said, we could say that we have built close to a billion in new buildings in the last five years. We say we want growth to pay for itself. We don’t want you to raise taxes or impact fees. We want you to take a portion of that years net increase because of growth and use it to fund this bond match program.
Tom suggested some sort of hybrid sort of thing be looked at. Maybe up to 50% of the cost of schools could be funded through impact fees and the other 50% could be funded by using a matching program like what West Ada is proposing.
Debbie said we also must consider the aging of the schools. Mike said this bonding program would be designated for new infrastructure and for safe schools. Let’s say you are in Northern Idaho and you need $500,000 for upkeep of your infrastructure. You could run a bond, and the matching program would provide $250,000.
How do we fund it will be the question. He said, we have levy stabilization of $20 million a year. That would be cut in half. We could look at the lottery money and ask the question of what it is really for. How does new growth money work? In short, we have a lot of things the legislature could work with to fund a $50 -$70 million match program.
They showed a video on the program.
Mike said they tried to get this legislation passed through the Idaho School Board Association (ISBA). ISBA in its government affairs committee has taken a firm stance that anything requiring new money, whether it is a good idea or not, they put out a do-not-pass recommendation. The reason is, they want to fund the career ladder, so they can bring us up to funding we had in the past.
He felt the do-not-pass recommendation was not a slight. They did get 38% and will keep working on that.
Dave queried if you have to pay the match back. If you don’t have to, then why build up this fund and just appropriate it every year. Mike said, this idea is just conceptual, it is not necessarily set in stone but is a win-win for everybody. The fund will only be available to you if you pass a bond. He added they are not asking for a reduction of the super majority at 66 2/3.
Joe asked where the money would come from. Basically, it would come from a portion of the growth of income and sales tax.
Tammy asked why they are not adding the argument that education is a constitutional State Mandate. To provide a fair, thorough and uniform education. That doesn’t mean that building shouldn’t be part of our funding formula. Shouldn’t that at least be part of your argument?
When AIC brought their executive committee to speak to the Pro Tem and the House Speaker, neither of them could answer this question.
Tammy said that all of us in our cities and counties have an impact on issues like this. We hear from our property tax payers all the time. When you look at your property tax bill and 1/3 goes to construction, you start to wonder if there is a better way.
Jess Harrison said if you take some of this funding out of the growth of the sales tax stream, this would have a negative impact on cities and counties who rely on revenue sharing.
Tammy asked Mike to get the link and any proposed language for the bill to Bill who will distribute it to the rest of us. She asked the members to look at this proposal and pose questions of Mike and the rest.
Mike reiterated that they need to know what the members and other elected officials think of the proposal, so they can hash out nuances.
Joe reiterated to Mike that communication is key. Please be sure to communicate back to Bill with the Partnership on conversations that are had with legislators and others. If we are understanding the push back given by various groups, we can address some of that.
Bill presented the minutes and financial statement. This month’s expenses are normal except for the $100,000 payment to the SAUSA Program. Joe moved to approve the minutes and financial report and Debbie seconded. Motion carried.
Upcoming Legislative Session
Jess said we had a 25% turnover in the legislature. There is a real job for us to be educating these new legislators on local government issues.
Tammy commented on an article in the Idaho Press Tribune where the chair of the local government committee indicated that they do not meet very often, and it is not very important. Jess said we should be grateful that the local government committee doesn’t meet very often.
On the house side, they gave the local government chair to Representative Mendive from up north. The leadership positions in the Senate are the same. On the House side, Speaker Bedke and Representative Moyle retained their seats. Representative Monks became the Asst. Majority Leader. And Representative Blanksma from Hammett got Caucus Chair.
On the Senate Local Government and Taxation Committee, it will be very important for Mayors and Commissioners in the Treasure Valley to be in touch with that Committee. The new Chair is Senator Rice from Caldwell.
The November general fund monitor just come out. We are now about $63 million behind projections in the State Budget. This is due to individual tax rates. Essentially, there was tax relief at the State and Federal level. The Tax Commission believes this will be made up when tax filings come out in April. Unfortunately, we will be looking at an entire session of tight budgets.
As you know, Prop 2, Medication Expansion passed. There is roughly a 10% State match that will have to come out of the general fund budget. The public-school funding formula committee, after two years of work will be making a recommendation to change the funding formula this year. On top of this, we are in the 5th year of the career ladder implementation for teachers. So, there will be new money that will go into this.
It is going to be a real tight budget year.
As far as local-option tax, AIC has been working on this for years. We haven’t seen the kinds of shifts that we need in the legislature. One key component that we have been looking at, and we may want to shift our efforts toward, is the State is not collecting point of sale data on sales taxes. The tax commission is not collecting the data and is resistant to doing so without a new appropriation and the software to do so. The retail association has been adamant that they don’t support this. However, having good data is important. How can we make good decisions if we don’t know where the sales taxes are being generated?
One of the first things we need to do when discussing local-option tax would be to get the State Tax Commission to begin collecting point-of-sale data.
Stan said this point-of-sale issue is confusing to him because everyone has a tax id number and it should be easy to identify where sales are coming from. Jess said if you are Albertsons, you are paying sales tax, but it is all under one tax id number instead of from each individual store.
Another difficulty we are going to run into is, there is a sunset on the budget surplus eliminator legislation. Obviously, this coming year, there will be no surplus if revenues continue as they have. That makes it that more difficult to lift the sunset and make sure the legislation stays in place. It is really important for us to work to remove the sunset set clause or at least extend it.
She expects to see some movement on campaign finance reform. There has been an interim committee that has met the last couple years on this issue. Right now, if you’re in a city with less than 5,000 in population, you don’t have to file a campaign finance report. They are going to get rid of the population threshold.
The Secretary of State got an appropriation last year to put in place software to move to a State-wide system of campaign finance filings. It will remove the burden from city clerks in collecting those filings. Because they already put the appropriation in place, we expect them to move forward this session.
She has good news on one front. They have been working with the Idaho Association of Commerce and Industry and with Counties about business personal property tax repeal. About 80% of businesses don’t have to report these taxes because there is a threshold that exempted the first $100,000. Even though, this still comprises about $120-$140 million for counties, cities and school districts.
AIC met with them over the summer and they agreed not to push forward on this issue this legislative session. They are working with Counties and Assessors to make sure there are streamlined definitions on personal property. What has been happening is that some assessors in some counties have been counting one certain thing while others have not been.