School funding progress

BOISE – State lawmakers said they finally saw hope for ending their long legislative session Tuesday, after both the House and Senate made major decisions on property tax bills.

The battle’s not over yet. But House Speaker Bruce Newcomb told the House late Tuesday, “I think, God willing, we might be going home Friday. … We’re getting down to the end here.”

The Senate voted 18-17 on Tuesday morning in favor of Senate Joint Resolution 108, a constitutional amendment to replace the entire school operations property tax levy – more than $200 million – with increased sales taxes. But that measure needed a two-thirds vote to pass, so it fell short.

However, the vote sent an important signal that a majority of the Senate may favor the idea – and the House is working to send to the Senate legislation to make that funding shift without changing the constitution.

Although a constitutional amendment requires a two-thirds vote in each house and a majority vote of the people at the next election to take effect, a statutory change just requires majority votes in both houses and the governor’s signature.

Also on Tuesday, the House unanimously agreed to concur in Senate amendments to House Bill 421, the bill to increase the homeowner’s exemption, and HB 422, to increase the “circuit breaker” tax break for the low-income elderly and disabled.

However, both those bills still need final votes in the House, and HB 421 may be held while the House considers a new bill, HB 876, that combines the homeowner’s exemption hike with the school-funding shift.

Rep. Jim Clark, R-Hayden Lake, one of three sponsors of the new combination bill, told the House Revenue and Taxation Committee on Tuesday afternoon, “Probably for the first time in a very long time, we’re going to raise a tax to get a much bigger benefit on property tax relief, which in some parts of the state is desperately needed.”

The idea of the shift is to replace the current $3 per $1,000 property tax levy for school operations with a sales tax increase from the current 5 percent to 6.25 percent. That should raise enough money to make up for the lost school funding, plus fill a $12 million school stabilization fund.

House Tax Chair Dolores Crow, R-Nampa, said, “This has been a very hard thing for some of us to look at this and decide we’re going to raise taxes on our last breath here.” Crow, who is retiring after this session, added, “But in reality, we’re going to have to do things we don’t want to do or camp out here the rest of the year – which is also very expensive for taxpayers.”

The House Revenue and Taxation Committee voted 13-6 to introduce HB 876 and send it directly to the full House. Legislative leaders said the House likely will suspend rules to allow a vote on it this morning.

Clark voted for the bill in the committee, but Rep. George Sayler, D-Coeur d’Alene, voted against it. He asked if there was any guarantee that the money from the sales tax increase actually would go to schools.

Later, at an open Democratic caucus, Sayler and other House Democrats said the bill doesn’t specifically tie any of the new sales tax revenue, beyond the $12 million stabilization fund, to schools. Rep. Mike Mitchell, D-Lewiston, said, “There really is no guarantee – it’s up for grabs.”

Rep. Nicole LeFavour, D-Boise, said poor people will bear the brunt of the package deal, because they spend more of their income on necessities like groceries and clothing and are more likely to be renters. “Those folks are going to be paying for property tax relief,” she said.

In the Senate, North Idaho senators spoke out strongly in favor of the constitutional amendment. Sen. Shawn Keough, R-Sandpoint, who co-chaired an interim committee that held hearings around the state on property tax reform, said fast-rising market values on homes have little to do with the cost of adequately funding education – though current school operations funding is tied directly to those values.

“The citizens of Idaho should have a full-on debate about … our tax structure,” Keough told the Senate. “The K-12 system is the Legislature’s responsibility. We need to take that responsibility into our general fund. … That piece is ours, and that’s why I support this resolution.”

Sen. Mike Jorgenson, R-Hayden Lake, told the Senate, “The people where I come from have been trying to tell us for a long time that there’s an issue. … Property taxes are causing people to be displaced from their homes, they’re causing people to have to sell their homes. School bonds are being turned down.”

Some senators who backed the amendment said it would help future school bonds pass – because people’s overall property tax bills would be much lower, so they’d be more willing to vote for the small increases that go along with school bonds.

Opponents had a variety of reasons for rejecting the measure, with some saying it merely would postpone property tax reform for another year, others expressing concern about school funding, and still others saying a shift from one tax to another wasn’t real reform.

Sen. Gerry Sweet, R-Meridian, said, “Shifting from one tax to another is not true tax relief. … We have failed to address the most significant component, and that is spending.”

All five Panhandle senators voted in favor of SJR 108, while Sen. Gary Schroeder, R-Moscow, voted against it.