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S1492............................................................by FINANCE SCHOOL FUNDING - Amends existing law to provide that the property tax replacement in school funding shall be made by appropriation rather than by an automatic distribution from the sales tax receipts. 02/17 Senate intro - 1st rdg - to printing 02/18 Rpt prt - to Fin
S1492|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE SENATE SENATE BILL NO. 1492 BY FINANCE COMMITTEE 1 AN ACT 2 RELATING TO PROPERTY TAX REPLACEMENT IN SCHOOL FUNDING; AMENDING SECTION 3 33-802, IDAHO CODE, TO AUTHORIZE LEVIES TO EQUAL THE AMOUNT TO BE REPLACED 4 IN THE EVENT APPROPRIATIONS FALL SHORT OF THE ACTUAL LEVY VALUE; AMENDING 5 SECTION 33-1002D, IDAHO CODE, TO STRIKE REFERENCE TO SALES TAX RECEIPTS 6 AND PROVIDE THAT APPROPRIATIONS SHALL BE MADE FOR PROPERTY TAX REPLACE- 7 MENT; AND AMENDING SECTION 63-3638, IDAHO CODE, TO STRIKE DISTRIBUTION OF 8 SALES TAX RECEIPTS FOR THE PURPOSE OF PROPERTY TAX RELIEF AND TO MAKE 9 TECHNICAL CORRECTIONS. 10 Be It Enacted by the Legislature of the State of Idaho: 11 SECTION 1. That Section 33-802, Idaho Code, be, and the same is hereby 12 amended to read as follows: 13 33-802. SCHOOL LEVIES. Any tax levied for school purposes shall be a lien 14 on the property against which the tax is levied. The board of trustees shall 15 determine the levies upon each dollar of taxable property in the district for 16 the ensuing fiscal year as follows: 17 1. Bond, Interest and Judgment Obligation Levies. Such levies as shall be 18 required to satisfy all maturing bond, bond interest, and judgment obliga- 19 tions. 20 2. Maximum School Maintenance and Operation Levies. Such levies for main- 21 taining and operating the schools of the district and for the payment of 22 tuition and transportation, that do not exceed an amount equal to four-tenths 23 of one percent (.4%) during tax year 1994, and do not exceed an amount equal 24 to three-tenths of one percent (.3%) during tax year 1995 and thereafter, 25 applied to the actual or adjusted market value for assessment purposes of the 26 district as such valuation existed on December 31 of the previous year, but 27 allowances necessary as a credit for prepaid taxes, as provided in section 28 63-1607, Idaho Code, shall not be included in such maximum levies. In 29 any year in which the appropriation to replace property taxes is not suffi- 30 cient to replace one-tenth of one percent (.1%), the district shall be autho- 31 rized to levy, in addition to an amount equal to three-tenths of one percent 32 (.3%), the amount required to replace the insufficiency. 33 3. Authorized School Maintenance and Operation Levies. Such levies for 34 maintaining and operating the schools of the district and for the payment of 35 tuition and transportation that do not exceed one hundred eleven percent 36 (111%) of the local district's contribution authorized in subsection 2. of 37 section 33-1002, Idaho Code. Implementation of the provisions of this subsec- 38 tion shall be authorized only after approval by a majority of the district's 39 electors voting on the question. Levies otherwise authorized by law shall not 40 require an election. 41 4. Supplemental Maintenance and Operation Levies. No levy in excess of 42 the levy permitted by subsection 2. or 3. of this section shall be made by a 43 noncharter school district unless such a supplemental levy in a specified 2 1 amount and for a specified time not to exceed two (2) years be first autho- 2 rized through an election held pursuant to chapter 4, title 33, Idaho Code, 3 and approved by a majority of the district electors voting in such election. A 4 levy approved pursuant to this subsection may be reduced by a majority vote of 5 the board of trustees in the second year. 6 5. Charter District Supplemental Maintenance and Operation. Levies pursu- 7 ant to the respective charter of any such charter district shall be first 8 authorized through an election held pursuant to chapter 4, title 33, Idaho 9 Code, and approved by a majority of the district electors voting in such elec- 10 tion. 11 6. The Local District Contribution. The local school district contribu- 12 tion levy is the amount utilized for calculating local district participation 13 in the educational foundation program, which is applied to the adjusted market 14 value for assessment purposes, as such valuation existed on December 31 of the 15 previous year. 16 7. The board of trustees of any school district that has, for at least 17 seven (7) consecutive years, been authorized through an election held pursuant 18 to chapter 4, title 33, Idaho Code, to certify a supplemental levy that has 19 annually been equal to or greater than twenty percent (20%) of the total gen- 20 eral maintenance and operation fund, may submit the question of an indefinite 21 term supplemental levy to the electors of the school district. Such question 22 shall clearly state the dollar amount that will be certified annually and that 23 the levy will be for an indefinite number of years. The question must be 24 approved by a majority of the district electors voting on the question in an 25 election held pursuant to chapter 4, title 33, Idaho Code. The levy approved 26 pursuant to this subsection may be reduced by a majority vote of the board of 27 trustees during any fiscal year. 28 SECTION 2. That Section 33-1002D, Idaho Code, be, and the same is hereby 29 amended to read as follows: 30 33-1002D. PROPERTY TAX REPLACEMENT. The purpose of this section is to 31 replace a portion of the authorized school maintenance and operation property 32 tax levy with state sales tax receipts. As used in this section, the term 33 "property tax computation ratio" shall mean a ratio determined by dividing the 34 district's certified property tax maintenance and operation budget by the 35 actual or adjusted market value for assessment purposes as such values existed 36 on December 31 of the previous calendar year. 37 (1) (a) In the case of a school district that had a property tax computa- 38 tion ratio of not less than four-tenths of one percent (.4%) in tax year 39 1994, that school district shall receive from thesales tax receipts40transferred as provided in section 63-3638, Idaho Codeappro- 41 priations made for that purpose , an amount equal to the greater of 42 the district's actual or adjusted market value for assessment purposes as 43 such valuation existed on December 31 of the previous calendar year multi- 44 plied by one-tenth of one percent (.1%). 45 (b) In the case of a school district that had a property tax computation 46 ratio of less than four-tenths of one percent (.4%) in tax year 1994, the 47 greater of the 1992, 1993 or 1994 property tax computation ratio less 48 three-tenths of one percent (.3%) shall be designated the district's base 49 multiplier. In no case shall the base multiplier be less than zero (0). 50 Four-tenths of one percent (.4%) less the greater of the district's 1992, 51 1993 or 1994 property tax computation ratio shall be designated the 52 district's adjustment factor. In no case shall the adjustment factor be 53 greater than one-tenth of one percent (.1%) or less than zero (0). Each 3 1 school district's actual multiplier shall be the base multiplier plus one- 2 fifth (1/5) of the adjustment factor in tax year 1995, the base multiplier 3 plus two-fifths (2/5) of the adjustment factor in tax year 1996, the base 4 multiplier plus three-fifths (3/5) of the adjustment factor in tax year 5 1997, the base multiplier plus four-fifths (4/5) of the adjustment factor 6 in tax year 1998, and the base multiplier plus the adjustment factor in 7 tax year 1999 and beyond. Each school district shall receive, from the 8sales tax receipts transferred as provided in section 63-3638, Idaho9Codeappropriations made for that purpose , an amount 10 equal to the district's actual or adjusted market value for assessment 11 purposes as such valuation existed on December 31 of the previous calendar 12 year multiplied by the district's actual multiplier. 13 (2) (a) Participation in this property tax reduction program is voluntary 14 for a charter district. If a charter district participates, in addition to 15 the provisions of subsection (1) of this section it shall not have a prop- 16 erty tax computation ratio that is above three-tenths of one percent 17 (.3%) or the district's property tax computation ratio in tax year 1994, 18 less one-tenth of one percent (.1%), whichever is greater. 19 (b) If in any year the charter district's property tax computation ratio 20 used to calculate its maintenance and operation budget is increased above 21 the limit specified in this subsection the district shall not be eligible 22 for the distribution pursuant to subsection (1) of this section for that 23 year. 24 (3) Limitations imposed upon a school district's property tax computation 25 ratio under the provisions of this section do not apply to any levy approved 26 by electors of the school district as provided by law. 27 (4) Distributions calculated as provided in this section shall be made to 28 school districts of this state in two (2) equal installments on the due dates 29 as specified in section 63-903(1), Idaho Code, for the property taxes being 30 replaced. 31 (5) For purposes of section 33-1002, Idaho Code, moneys distributed pur- 32 suant to this section shall not be included in determining total state funds. 33 SECTION 3. That Section 63-3638, Idaho Code, be, and the same is hereby 34 amended to read as follows: 35 63-3638. SALES TAX -- DISTRIBUTION. All moneys collected under this chap- 36 ter, except as may otherwise be required in section 63-3203, Idaho Code, shall 37 be distributed by the tax commission as follows: 38 (a) An amount of money shall be distributed to the state refund account 39 sufficient to pay current refund claims. All refunds authorized under this 40 chapter by the commission shall be paid through the state refund account, and 41 those moneys are continuously appropriated. 42 (b) Five hundred thousand dollars ($500,000) per year is continuously 43 appropriated and shall be distributed to the permanent building account, pro- 44 vided by section 57-1108, Idaho Code. 45 (c) Four million eight hundred thousand dollars ($4,800,000) per year is 46 continuously appropriated and shall be distributed to the water pollution con- 47 trol account established by section 39-3605, Idaho Code. 48 (d) (1) An amount equal to the sum required to be certified by the chair- 49 man of the Idaho housing and finance association to the state tax commis- 50 sion pursuant to section 67-6211, Idaho Code, in each year is continuously 51 appropriated and shall be paid to any capital reserve fund, established by 52 the Idaho housing and finance association pursuant to section 67-6211, 53 Idaho Code. Such amounts, if any, as may be appropriated hereunder to the 4 1 capital reserve fund of the Idaho housing and finance association shall be 2 repaid for distribution under the provisions of this section, subject to 3 the provisions of section 67-6215, Idaho Code, by the Idaho housing and 4 finance association, as soon as possible, from any moneys available there- 5 for and in excess of the amounts which the association determines will 6 keep it self-supporting. 7 (2) An amount equal to the sum required by the provisions of section 8 63-709, Idaho Code, is continuously appropriated and shall be paid as 9 provided by section 63-709, Idaho Code. 10(3) An amount required by the provisions of section 33-1002D, Idaho11Code.12 (e) Sixper centpercent (6%) is hereby appro- 13 priated and shall be paid to the county treasurer of each county in amounts to 14 be determined as follows: 15 (1) Each taxing district other than school districts shall be entitled to 16 a base share of sales tax moneys equal to the amount distributed to that 17 district for the fourth calendar quarter of 1979. The computation shall 18 not include any distributions made to the credit of either the former 19 county school levy or the state water pollution control levy. The percent- 20 age so determined for each taxing district shall be applied each quarter 21 to the above percentage of sales tax. The resulting sums shall be paid to 22 the county treasurer of each county for distribution to each taxing dis- 23 trict, except school districts, which received sales tax moneys in 1979. 24 Whenever a taxing district is dissolved, the dissolved district's share of 25 sales moneys shall be credited continuously to the county current expense 26 fund. 27 (2) Whenever the amount of nonschool district sales tax moneys distrib- 28 uted exceeds in any quarter the total amount of moneys distributed to non- 29 school districts for the base quarter, which is the fourth calendar quar- 30 ter of 1979, by tenper centpercent (10%), or 31 more, the excess of the base quarter shall be paid to the county treasurer 32 of each county for distribution to each taxing district in the county, 33 except school districts, in the following manner. 34 The state tax commission shall compute the percentage that the aver- 35 age amount of taxes collected from assessments for the years 1965, 1966 36 and 1967 on the personal property described as business inventory in sub- 37 sections (1) and (2) of section 63-602W, Idaho Code, for each county bears 38 to the average total amount of taxes collected from assessments for said 39 years on the personal property described as business inventory in subsec- 40 tions (1) and (2) of section 63-602W, Idaho Code, for all counties in the 41 state. The percentage so determined for each county shall be applied to 42 the sales tax distributed under this subsection and the resulting sum 43 shall be paid to the county treasurer of each county for distribution to 44 each taxing district, except school districts, in the county as follows: 45 (i) Each year the county commissioners in each county shall take 46 the tax charge, applicable to the current property roll equalized by 47 county commissioners sitting as a board of equalization, of each tax- 48 ing district within the county, except school districts, and divide 49 it by the total current tax charges applicable to the current prop- 50 erty roll of all taxing districts, except school districts, within 51 said county and the resulting percentages shall be applied to the 52 county's proportionate share of said sales tax account and the 53 resulting amount shall be distributed to each taxing district in the 54 county periodically but not less frequently than quarterly by the 55 county auditor and applied by such taxing districts in the same man- 5 1 ner and in the same proportions as revenues from property taxation. 2 (ii) The moneys set aside and appropriated to the county treasurer 3 out of the sales tax account above may be considered by the counties 4 and other taxing districts and budgeted against at the same time, in 5 the same manner and in the same year as revenues from taxation on all 6 classes of personal property which these moneys replace. 7 (3) All moneys distributed pursuant to subsection (e) shall be subject to 8 the redistribution provisions of section 40-801, Idaho Code, where appli- 9 cable. 10 (f) One dollar ($1.00) on each application for certificate of title to a 11 motor vehicle, or initial application for registration processed by the county 12 assessor or the Idaho transportation department excepting those applications 13 in which any sales or use taxes due have been previously collected by a 14 retailer, shall be a fee for the services of the assessor of the county or the 15 Idaho transportation department in collecting such taxes, and shall be paid 16 into the current expense fund of the county or state highway account estab- 17 lished in section 40-702, Idaho Code. 18 (g) Seven and three-quartersper centpercent 19 (7.75%) is continuously appropriated and shall be distributed to the revenue 20 sharing account which is created in the state operating fund, and the moneys 21 in the revenue sharing account will be paid by the tax commission as follows: 22 (1) One-half (1/2) shall be paid to the various cities as follows: 23 (i) Fiftyper centpercent (50%) of such 24 amount shall be paid to the various cities, and each city shall be 25 entitled to an amount in the proportion that the population of that 26 city bears to the population of all cities within the state; and 27 (ii) Fiftyper centpercent (50%) of such 28 amount shall be paid to the various cities, and each city shall be 29 entitled to an amount in the proportion that the preceding year's 30 market value for assessment purposes for that city bears to the pre- 31 ceding year's market value for assessment purposes for all cities 32 within the state. 33 (2) One-half (1/2) shall be paid to the state's general account or to the 34 various counties as follows: 35 (i) One million three hundred twenty thousand dollars ($1,320,000) 36 shall be distributed one forty-fourth (1/44) to each of the various 37 counties; and 38 (ii) The balance of such amount shall be paid to the various coun- 39 ties, and each county shall be entitled to an amount in the propor- 40 tion that the population of that county bears to the population of 41 the state. 42 (h) Any moneys remaining over and above those necessary to meet and 43 reserve for payments under other subsections of this section shall be distrib- 44 uted to the general account.
STATEMENT OF PURPOSE
RS08026
This legislation amends the Idaho Code with respect to the
public school property tax replacement that is diverted from
the sales tax collections. The change proposed here will
allow the sales tax receipts to be deposited into the General
Fund and then an appropriate amount will be included in the
public school budget. Currently, the property tax replacement
is paid directly to the school districts without ever going
through the budgeting and appropriations process. As a result
of this direct payment, various reports of the amount of
state General Funds supporting the public schools are
understated by over $50 million. (The public school
percentage share of the General Fund is also understated.) A
second statute change provides that if the appropriation to
replace property taxes is not sufficient to replace the
one-tenth of one percent (0.1%), the districts are authorized
to levy an amount to replace the insufficiency.
FISCAL NOTE
There would be no detrimental impact on the General Fund.
The sales tax receipts to the General Fund would increase by
the amount being paid directly to the school districts to
replace property taxes (approximately $50 million) and the
appropriation of General Funds to the public schools would
increase by the same amount.
CONTACT: Gordon Fisher
Budget and Policy Analysis
STATEMENT OF PURPOSE/ FISCAL NOTE
S1492