As we transition to the second half of the legislative session, legislators are facing crunch time to cover some significant ground. This Thursday – Valentine’s Day – is the deadline for the Appropriations committee to decide how much they think we will have to spend this year. The revenue estimate will be key to making several major decisions, such as how to fund nursing homes, education, community support providers, state employees, and any one-time special projects.
Two big questions will be: 1) how much revenue will come in from collecting online sales taxes? and 2) when and how will the anticipated recession affect the general fund?
On Friday of the following week, all committees must have acted on all bills in the house of origin. Monday, February 25, is “crossover day,” when all House bills have to be acted on in the House and sent to the Senate, and all Senate bills acted on by the Senate and sent to the House. It’s a legislative tradition to wear black on crossover day because of all the bills that historically die that day.
There are a couple of bills this year dealing with school capital outlay. HB1139 would repeal the cap on taxes levied by a school district for capital outlay. HB1141 would increase the maximum taxes levied by a school district, from $2,800/student to $3,800/student.
Capital outlay impacts every property owner, but how exactly does it work?
School districts have the authority to levy up to $3 per $1,000 of valuation for capital outlay purposes. Unlike the school general fund levy which varies among classes of property, the capital outlay levy is the same for all land classes. This money can be used to purchase capital assets, including books and software, cover transportation costs, and pay for warranties on capital assets. A school district may transfer up to 45% of its capital outlay taxes to the school general fund. Growth of the school capital outlay fund is capped at three percent or inflation, whichever is less.
When the legislature changed the school funding formula in 2016, one of the provisions set a limit of $2,800 per student for capital outlay purposes starting in 2021. The same growth limitation of three percent or inflation is applied to the per-student limit.
Last year, the legislature recognized that some school districts had current capital outlay obligations exceeding $2,800 per student. School districts that had acquired debt prior to July 1, 2016, can ask for the obligation payment plus an additional $2,800 per student. Districts that did not have debt prior to 2016 are bound by whichever of the two limiting factors will generate the fewest tax dollars – the three-percent-or-inflation index or the per-student cap.
The school funding formula is one of the more intricate parts of our state budget, and the capital outlay fund is only a portion of that formula. I welcome your questions on the topic!