FINAL BILL REPORT

HJR 4220

BYRepresentatives Grimm, Holland, Ebersole, Betrozoff, Cole, Taylor, H. Sommers, Bristow, Hine, Rayburn, Brough, Wang, Jacobsen, Dellwo, Brekke, Nelson, Holm, Rasmussen, C. Smith, Todd, Unsoeld and Locke

Providing funds for school construction.

House Committe on Ways & Means

Senate Committee on Education

AS PASSED LEGISLATURE

BACKGROUND:

The state's constitution establishes two funds which are dedicated to support for school construction.  The Permanent Common School Fund is a "permanent and irreducible" endowment which generates interest earnings for school projects or for financing state bonds for schools.  The Common School Construction Fund is derived primarily from state timber sales and leases of school trust lands, as administered by the Department of Natural Resources, and it provides cash for school projects.  Since the 1983-85 biennium, timber revenues for this fund have been at approximately half the level reached in 1979-81, first as a result of defaults on timber contracts and then as a result of lower bids on new timber sales.  At the same time, anticipated enrollment growth and aging facilities have increased local school district demand for state construction monies.

For both years of the 1985-87 biennium, eligible school construction projects have exceeded the funding capacity of the Common School Construction Fund.  A backlog has developed which, as of April 1987, totalled $314 million in unfunded projects which already have both State Board of Education approval and local matching funds.  New projects will be added to this backlog as school districts continue to pass bond levies to raise the local share of construction costs. By comparison, the school trust land revenue is projected to provide only $95 million for school construction during the 1987-89 biennium.

SUMMARY:

A constitutional amendment will be submitted to the voters in November 1987, to allow an additional state property tax levy for school construction to be exempted from the current 1 percent constitutional limitation on regular property taxes. The additional state property tax exempted in this manner may not exceed 35 cents per $1,000 of true and fair value, and may not be imposed for more that 15 years.  Any proceeds of such a levy which are dedicated to the Permanent Common School Fund are included in the "permanent and irreducible" principal of that fund, generating interest for school construction projects.  The state could no longer issue bonds financed by the interest earnings from the Permanent Common School Fund.

VOTES ON FINAL PASSAGE:

      House 86  11

      Senate    33    16(Senate amended)

      House 86  11(House concurred)

EFFECTIVE:July 26, 1987