SENATE BILL REPORT

SJR 8224

BYSenators Bailey and Rinehart

Regarding the school construction fund.

Senate Committee on Education

Senate Hearing Date(s):February 27, 1989

Senate Staff:Leslie Goldstein (786-7424)

AS OF FEBRUARY 27, 1989

BACKGROUND:

The state's Constitution establishes two funds which are dedicated to support 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 (CSC) fund is derived primarily from state timber sales and leases of school trust lands.  The CSC fund is administered by the Department of Natural Resources and it provides cash for school construction 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 moneys.

Since the 1985-87 biennium, eligible school construction projects have exceeded the funding capacity of the common school construction fund.  A backlog has developed of approximately $320 million in unfunded projects which already have both State Board of Education approval and local matching funds.  The State Board has placed a moratorium on the approval of new projects.  School trust land revenue is projected to provide only $150 million for school construction during the 1989-91 biennium.

SUMMARY:

A special property tax of 9 cents for each $1,000 of assessed valuation is imposed for twenty years beginning in calendar year 1990.  This additional state property tax for school construction is exempt from the current 1 percent constitutional limitation on regular property taxes. 

The purpose of the tax is to help fund common school construction.  The revenues from the tax are deposited in the common school construction fund.

Appropriation:  none

Revenue:   yes

Fiscal Note:    requested February 27, 1989

Effective Date:Upon approval by the people at the next general election.