Home » Control of Education » WA Senate Bill 6109 – Levy transfer to the State

WA Senate Bill 6109 – Levy transfer to the State

This is a re-post of an article that aims to show why the loss of local levy’s for schools would be harmful. Take a read and let us know what you think.

On April 15 2015, State Senator Bruce Dammeier introduced Senate Bill 6109 to the Washington Senate Ways and Means Committee. Senate Bill 6109 would transfer about one billion dollars in voter approved local school district levy funds to the State budget where it would presumably be used to meet the state legislature’s obligation to pay for teacher salaries. Some call this a Levy Swap bill. Others call this a Levy Swipe bill because it uses local levy funds in a way not approved by local voters when they approved these local levies. We will call it a property tax transfer proposal since it transfers about one billion dollars in property taxes from the local tax rolls to the state tax rolls. In this article, we will review the drawbacks of Dammeier’s property tax transfer proposal.

There are basically five major drawbacks to the Dammeier Property Tax Transfer:

#1 It Does not Comply with the Washington State Constitution or Supreme Court Order to Fully and Uniformly Fund Public Schools from Stable State Sources of Revenue

#2 It Could Actually Reduce School Funding Because It Does Not Insure that Funds Taken from Local School Districts would be Returned to Local School Districts

#3 It Raises Property Taxes on Over Half of Washington State Homeowners

#4 It is a Betrayal of the Trust of the Voters that could Lead to a Tax Payer Rebellion

#5 There is a Much Fairer and Better Alternative that does Fully Fund Public Schools Without Robbing Voter Approved Local School District Funds

We will take a closer look at all five of these drawbacks.

#1 It Does not Comply with the Washington State Constitution or Supreme Court Order to Fully and Uniformly Fund Public Schools from Stable State Sources of Revenue

Article 9, Section 1 of the Washington State Constitution states: “It is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.” Article 9, Section 2 of the Washington State Constitution states: “The legislature shall provide for a general and uniform system of public schools.”

As far back as 1978, the Washington Supreme Court concluded that these two clauses require the state legislature to provide a “uniform” system of public schools using ample, reliable, uniform state funding sources. In 1978 and again in 2012, the Washington State Supreme court stated that local levies could not be used to fund basic education because the local levies were not reliable and because they result in an unfair system of “property-rich” school districts that can pass local levies and “property-poor” school districts that cannot pass local levies.

In 2012, in the McCleary School Funding case, the Washington Supreme Court ordered the state legislature to stop using local levies to fund basic education and to come up with a plan to fully fund public schools from stable, reliable state sources. In September 2014, the Supreme Court found the State legislature in Contempt of Court in part because the legislature failed to stop using unstable and unreliable and unfair local levies to partially fund public schools. So the legislature knows it needs to enact some sort of school funding reform.

Unfortunately, the Dammeier Property Tax Transfer would not result in a uniform system of public schools because the Levy Cap in the Dammeier proposal is unrelated to state school district funding.

The Levy Lid Act of 1978… An Example of a Cap that is Related to State School District Funding
Completely uniform funding of public schools would not result in a uniform system of public schools. This is because some school districts have greater needs than other school districts. Some school districts have a higher percentage of special needs students who require more funding. Some school districts have more high poverty students who require more funding. Some school districts have a higher cost of living which requires more funding to result in all children having a uniform system of public schools. Some school districts have students that live much farther from the school requiring higher transportation costs than other school districts. The state legislature must respond to all of these differences in circumstances with a fair funding formula so that all children have a uniform system of public schools. This means that each school district receives a different allocation in “per pupil” funding from the state.

The only way to maintain a “constitutionally required uniformity” between all school districts is to base the maximum local levy, also called the Levy Lid, as a percentage of total state funding for each school district. Unfortunately, the Dammeier Property Tax Transfer proposal does not do this. Instead, the Dammeier proposal merely lowers the maximum local levy to “$1.25 per thousand of assessed valuation.” This language continues a system of rich school disticts, such as Bellevue, that have a high level of property per child in their school district and poor school districts, such as Yakima, that have a low level of property per child in their school district.

In 1987, the State legislature (under an order from the Supreme Court to do something to fix the local levy problem) passed the Levy Lid Act which set a lid of 10% of State school revenue per district for local school levies. This law, had it been followed was the proper solution and would have resulted in a uniform system of public schools because it was based on a percent of total state funding. Unfortunately it was not followed.

Over time, this levy lid was raised to 20%, then 24% and most recently to 28%. The base was also expanded to include federal revenue. Here is the rise in local Maintenance and Operation Levy funds since 1996 (per Washington Department of Revenue Property Tax Table 12).

s1
The higher the levy lid is raised, the greater the difference is between rich school districts that have a lot of property per student and can easily pass local levies and poor districts that have much less property per student and therefore cannot pass local levies. This is why the Supreme Court ordered this system to be changed. It is essential to restore a uniform system of public schools by returning to a local levy lid of 10% so that there can be no more than a 10% difference between rich school districts and poor school districts.

#2 The Dammeier Property Tax Transfer Could Actually Reduce School Funding Because It Does Not Insure that Funds Taken from Local School Districts would be Returned to Local School Districts
You can see from the above chart that local School Maintenance levies have doubled from one billion dollars per year to more than two billion dollars per year. Analysis from court documents indicates that well over half of this two billion per year is used by local school districts to fund basic education. The idea behind the Dammeier Property Tax Transfer bill is to take one billion dollars away from these locally approved levies and give it to the State where it will supposedly be used to increase state funding for public schools by one billion dollars per year (but also reduce local funding for public schools by one billion per year). This obviously would do nothing to provide the $4 billion per year in additional funds needed to reduce class sizes as required by Initiative 1351 or fully fund schools as required by the Supreme Court order or move our state closer to the national average in school funding. It is merely rearranging the deck chairs on the Titanic. It is robbing Peter to pay Peter!

Even worse, there is no guarantee that the one billion dollars transferred from local school districts to the state would actually get back to the local school districts. The Dammeier Property Tax Transfer attempts to put the billion dollars transferred away from local school districts into a special Education Funding Account. However, such gimmicks do not actually work as the legislature can simply lower state support from the general fund by an amount greater than the billion dollars put in the new Education Funding Account. So there is a significant risk that school funding would actually be reduced as a result of the Senate Bill 6109. This danger is made worse by the requirement in the Senate Bill that local levy funds would be prohibited from being used for basic education funding. Forcing school districts to spend funds on enrichment when they lack adequate funds for basic education would reduce funding available to hire and pay teachers. This means that some school districts would have to fire teachers and increase class sizes while other school districts were hiring teachers to reduce class sizes.

#3 The Dammeier Property Tax Transfer would Raise Property Taxes on Over Half of Washington State Homeowners
Here is the technical language from Senate Bill 6109: The state property tax levy rate is limited to $3.60 per $1,000 of assessed value. The actual tax rate for state property taxes collected in 2015 is $2.19 per $1,000 of assessed value. The state property tax is increased to the following: $2.70 for taxes collected in calendar year 2018; $3.50 for taxes collected in 2019; and $3.60 for taxes collected in 2020.” The amount collected in local levies by school districts is decreased – eventually dropping to $1.25 per $1,000 of assessed value. But it is not decreased by the same amount in each school district that the state property tax is increased. This results in over half of the state’s homeowners paying more in property taxes.

There is an interesting chart that details exactly how the Dammeier Property Tax Transfer proposal would harm various homeowners around the state. About 60% would see their property taxes go up. 20% would see no change and 20% would see a reduction.
https://app.leg.wa.gov/CMD/Handler.ashx?MethodName=getdocumentcontent&documentId=OXN8YhXiTE0&att=false

To give you just a couple of examples, the local levy rate in Seattle is 1.31 per thousand and would fall to 1.25 per thousand under the levy swap. But the state levy which is now 2.40 per thousand would rise to 3.83 for a difference of 1.37 per thousand. This would mean that a person with a 400,000 home in Seattle would see their property taxes rise by $548 per year while school funding in Seattle would fall by millions of dollars per year. Bellevue and Mercer Island homeowners would get an added hit to their property taxes of $1.43 per thousand. Issaquah would see their total property tax bill go up by 57 cents per thousand.

Meanwhile in Puyallup, the local levy rate is $4.01 and would fall to $2.33 while the State rate would rise from the current $2.46 to $3.93 for a net reduction of $0.20 per thousand. So a homeowner with a $400,000 home in Puyallup would see their property taxes drop $80 per year while their school funding would go up by millions of dollars per year. Perhaps this explains why Dammeier supports the bill. He is a homeowner in Puyallup! This bill is not likely to go anywhere because any Seattle legislator who voted for it would likely be voted out of office pretty quickly.

#4 It is a Betrayal of the Trust of the Voters that could Lead to a Tax Payer Rebellion
When the voters approved these local levies, it stated right on their ballots that the local levy funds would be spent in their local school districts. This was a promise made between the government and the people. You give us this money and here is exactly how it will be spent – on the children in your home and in your community. To take that money away from local school districts and first send it to the state where it may or may not be sent to some other school district would lead to a lack of trust on the part of the voters who would then be more likely to vote down future school levies out of a concern that those funds would also be diverted by the state legislature for purposes other than the purposes stated on the ballot. A far better solution would be to FIRST provide ample reliable state sources of revenue so that local levy funds were no longer needed to fund basic education and ONLY AFTER LOCAL FUNDS WERE NO LONGER NEEDED, to reduce the levy lid on FUTURE local levy elections to a maximum of 10% of state revenue for each school district. This is exactly what is accomplished by Senate Bill 6093.

#5 There is a Much Fairer and Better Alternative that does Fully Fund Public Schools Without Robbing Voter Approved Local School District Funds
The current House and Senate budget options propose state spending about $9 billion per year on schools ($9,000 per pupil). This is about $4,000 per pupil or $4 billion per year below the national average school funding of $13,000 per year per pupil. Senate Bill 6109, the Dammeier Property Tax Swap would rob one billion dollars in local funds and put them into state funds increasing state funding for schools to $10 billion per year or $10,000 per year per pupil. This would still result in per pupil funding being $3,000 per year below the national average. There would be no additional teachers hired and class sizes in Washington state would remain near the highest in the nation.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: