HOUSE BILL REPORT

EHJR 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

Majority Report:  Do pass.  (23)

      Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Allen, Appelwick, Basich, Belcher, Braddock, Brekke, Ebersole, Hine, Holland, Locke, Madsen, McLean, McMullen, Niemi, Peery, Rust, Sayan, Silver, H. Sommers, Sprenkle and Taylor.

Minority Report:  Do not pass.  (3)

      Signed by Representatives Fuhrman, Nealey and Schoon.

House Staff:Janet Peterson (786-7143)

AS PASSED HOUSE MARCH 20, 1987

BACKGROUND:

The state's constitution establishes two funds which are dedicated to support for school construction.  The Permanent 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 February 10, 1987, totalled $304 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 would be submitted to the voters in November 1987, to allow a 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 must be specifically authorized by a vote of the people, 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 these interest earnings from the Permanent Fund.

EFFECT OF SENATE AMENDMENT(S):  The Senate amendment deletes requirements that the statewide property tax dedicated to the Permanent Common School Fund be authorized by an additional proposition submitted to the voters in 1987.

Fiscal Note:      Requested March 6, 1987.

House Committee ‑ Testified For:    Wendy Flint, Evergreen School District Board of Directors; Jerry Hosman, Bethel School District Superintendent; Jim Hanson, Evergreen School District; Tom Brandon, Pasco School District; Dianne Campbell, School Facilities Cost Advisory Board; Office of Superintendent of Public Instruction; Duanne Zinger, Tacoma School District; Larry Swift, Washington State School Director's Association; Harry Petersen, State Board of Education; Ron Duncan, Shoreline School District.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    School districts are currently anticipating delays of up to ten years or more for needed construction projects, without supplementation of existing Common School Construction Fund revenues.  A major influx of additional revenues is needed.  If the state cannot provide money for modernization of schools, districts will have to let buildings deteriorate to the point where they need to be replaced.  The bill represents both a short-term and a long-term solution to school construction funding needs.

House Committee - Testimony Against:      None Presented.

VOTE ON FINAL PASSAGE:

      Yeas 86; Nays 11; Excused 1

Voting Nay: Representatives Brooks, Fuhrman, Grant, Hargrove, Jesernig, Nealey, Patrick, Prince, Vekich, Winsley and Mr. Speaker

Excused:    Representative Padden