| Washington State House of Representatives Office of Program Research |
BILL ANALYSIS |
| Finance Committee | |
HB 2332
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
Brief Description: Concerning the levies by school districts.
Sponsors: Representative Hunter.
Brief Summary of Bill |
|
Hearing Date: 3/2/07
Staff: Mark Matteson (786-7145).
Background:
Property taxes in general. The state constitution limits the sum of property tax rates to a
maximum of 1 percent of true and fair value, or $10 per $1,000 of market value. Levies that are
subject to the 1 percent rate limitation are known as "regular" levies, and there is no
constitutional voting requirement for regular levies. The Constitution does provide a procedure
for voter approval for tax rates that exceed the 1 percent limit. These taxes are called "excess"
levies. The most common excess levies are maintenance and operation (M&O) levies for school
districts and bond retirement levies. The Constitution provides that excess levies must obtain a
60 percent majority vote plus meet a minimum voter turnout requirement. Once a school district
issues an M&O levy, no other levy may be issued until the M&O levy expires.
Levy Lids. In 1977, when the state assumed additional responsibility for funding schools, the
Legislature limited school district maintenance and operation levy authority by enacting the levy
lid law. This law determines the maximum amounts school districts can collect through local
maintenance and operation levies. The original 1977 law, which took effect in 1979, sought to
limit levy revenue to 10 percent of a school district's state basic education allocation. It also
contained a grandfather clause which permitted districts that historically relied heavily on excess
levies to exceed the 10 percent limit.
Under current law, most districts may ask the voters to approve an amount equal to 24 percent of
the district's levy base. There are 91 school districts that are grandfathered at higher percentages
that range from 24.01 percent to 33.9 percent.
A district's levy base includes most state and federal revenues received by the district in the prior
school year. The levy lid formula increases the base by multiplying the district's state and
federal revenues by the percentage change in per student state expenditures between the prior
and current school years, divided by 55 percent.
Changes to the levy lid formula. Over time, the Legislature has modified the levy lid formula to
increase the lid amount, either by increasing the percentage rate (i.e., the 24 percent rate) or the
levy base. In 2004, there was an adjustment to the levy base to address the suspension of the
provisions of initiatives 728 and 732, which increased the base for 2005 and 2006 by almost 5
percent.
School districts for which M&O levies are issued immediately preceding legislative
modifications to the levy lid formula do not receive benefit of statutory changes until the current
levy expires and a new levy is issued.
Summary of Bill:
School districts may impose additional M&O levies to the extent the legislature increases
statutory capacity under the levy lid formula.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.