Tuesday, February 13, 2018

Joint Property Tax/Education Funding Hearing.  The House Education Funding Committee and House Property Tax Division held a joint hearing today to discuss HF 2495, Representative Steve Drazkowski's bill that would move debt service levies away from net tax capacity toward referendum market value.  Representative Drazkowski has worked tirelessly over the past few sessions to relieve the property tax burden on agricultural property, especially as that tax burden relates to school bond questions.  One of the primary differences between net tax capacity and referendum market value is that agricultural property is not included in the calculation of referendum market value.  The primary vehicle that has been established to alleviated the tax burden on agricultural property is the agricultural bond credit that was part of last year's tax bill.  That provision reduces the tax burden on agricultural property that is attributable to school bonded debt by 40%.  While that has brought real relief to owners of agricultural property, Representative Drazkowski wants to go further.

There's no question that owners of agricultural property carry a considerable burden on school bond issues, especially in school districts where agricultural property comprises an overwhelming percentage of a school district's total property wealth.  One of the problems that eliminating agricultural property from the tax base through the transition from net capacity to referendum market value is that there will be a shift in the tax burden from agricultural property to other types of property--mostly homestead property and commercial-industrial property--and that could make it more difficult to pass bond issues in a number of school districts.  To combat this tax burden shift, HF 2495 proposes an adjustment in the referendum market value tax base that would reduce the burden imposed by the operating levy and establishes a very high equalizing factor for the debt service equalization program.  There is ample time to work on this legislation, as the effective date would be for taxes payable in 2021.  Given the potential costs of the bill (and the fact that without these costs the shift in tax burden the bill would be extremely difficult to pass).

Here is a link to the language of HF 2495--Delete-all Amendment

Here is a link to the other documents posted on the Education Finance Committee web page.  There is a spreadsheet showing the change in tax burden resulting from all of the changes in HF 2495, but it is somewhat difficult to explain.  I will be receiving an electronic copy of the spreadsheet and will try to alter it to make it easier to understand (Me make something less complicated?  There's always a first time.)

Link: House Education Funding Division Homepage

Before I move on, I want to commend the House for holding a joint committee hearing on equalization.  Like I have remarked in the past, I can go back about 10 hard drives and try to find the letter I wrote to then-Education Funding Chair Representative Becky Kelso urging the creation of a joint committee comprised of members of the Education Funding and Property Tax Committees to work on equalization issues.  One of the on-going problems with the equalization issue is that it is often an policy "orphan" in that the tax committees believe it is education policy and should come from the education target and the education committees believe it is tax policy that should be accommodated in the tax committee target.  Thus, I have watched the game of policy hot potato for my 28 years of working on this issue and whether or not there is ever a formal committee to deal with equalization policy (and other elements of how the property tax system interfaces with the education funding system) is ever established, for one day, we at least got to see the two hands of the issue working together simultaneously.

Trauma-Informed Schools.  There have been a number of interesting education stories hitting the airwaves and newsprint these days.  One of the more compelling is this story from National Public Radio's Weekend Edition about the effects of trauma on students.  Take a listen.  It really shows how the need to address the needs of children is crucial if learning is to take place.

Link:  What Do Asthma, Heart Disease And Cancer Have In Common? Maybe Childhood Trauma

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