There are now several options on the table as to how to comply with the state Supreme Court’s McCleary decision. Gov. Inslee’s proposal and the House-passed ESHB 1843 would increase education spending but stay within the current funding structure (see this policy brief for more). The Senate-passed SSB 5607 would also increase spending but would go to a per-pupil funding model (see this policy brief for more). The Senate plan includes a swap of local property taxes for state property taxes.
This morning the Senate Ways and Means Committee will hear SB 5825, which has been introduced by Senators Mullet, Hobbs, and Takko as a “moderate approach.” It includes aspects of both the House- and Senate-passed bills. There is no fiscal note.
SB 5825 would require school districts to impose a regular property tax (as opposed to current maintenance and operations levies, which are not regular, but “excess”). The rate would be the lesser of $5 per $1,000 of assessed value or the district’s current M&O levy. Effectively, as the sponsors note, this would lock current M&O levies in place. Collections from the new tax would be remitted to the state, deposited in the “local school district property tax account,” and distributed back to school districts. The funds could only be used for basic education.
Districts would still be able to ask voters for additional enrichment levies. The maximum amount allowed would be the average number of students multiplied by $1,000 (adjusted for inflation). Districts would have to get approval from the Office of the Superintendent of Public Instruction prior to asking for enrichment levies, to ensure that they will not be used for basic education.
The state would provide matching funds for enrichment and regular levies for property-poor school districts. According to the sponsors, state levy equalization assistance would increase from $765 million to $1.5 billion a biennium.
The bill would also require school districts to separately account for basic and non-basic education spending and local and state revenues. The state auditor would have to ensure that excess levy funds are not used for basic education.
Minimum teacher salaries would be at least $45,000. It looks like the bill keeps the current prototypical school funding model but establishes uniform per-pupil amounts. The minimum total allocation per pupil would be $11,500. The bill would keep I-732 and I-1351.
According to Lens, the sponsors have also introduced SB 5855 and SB 5856 “to cover the new spending.” These bills have to do with retail sale nexus standards. This is a topic for another blog post, but basically it has to do with the current inability of states (under federal law) to require out-of-state sellers to collect sales taxes unless they have substantial nexus (i.e., physical presence) in a state.