1998 Legislation
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SENATE BILL NO. 1492 – School funding/property tax replcmt

SENATE BILL NO. 1492

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Daily Data Tracking History



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

Bill Text


S1492


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                                      IN 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 the  sales tax receipts
40        transferred as provided in section 63-3638, Idaho Code   appro-
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
 8         sales tax receipts transferred as provided in section 63-3638, Idaho
 9        Code   appropriations 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, Idaho
11        Code. 
12        (e)  Six  per cent   percent  (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 ten  per cent   percent  (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-quarters  per cent   percent 
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)   Fifty  per cent   percent  (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)  Fifty   per cent   percent  (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 / Fiscal Impact


    





                           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