GOP state senators want to implement a new statewide property tax to comply with a court order to fully fund public schools, while taking away school districts’ ability to approve local levies to pay for basic education.
The plan released Friday by Senate Republican leaders aims to meet the state’s obligations under the McCleary case, in which the state Supreme Court ruled five years ago that the state was failing to meet its constitutional duty to fully fund public schools.
The state is in contempt of court and being fined $100,000 a day over the Legislature’s failure to come up with a plan to fix school-funding problems by 2018.
Complying with the court’s order means the state has to take on the full cost of paying teachers and other school employees, which the state Supreme Court has said is a state responsibility.
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Right now, school districts are using local property tax levies to supplement what the state provides to hire employees — an arrangement the court has ruled unconstitutional because it leads to funding disparities between districts.
Democrats, including Gov. Jay Inslee, have expressed concern that relying on a statewide property tax to solve McCleary would raise property taxes in some districts, without putting any new money into schools. Those problems persist in the plan GOP senators put out Friday, said state Sen. Reuven Carlyle, D-Seattle.
“On the finance side, there is virtually no new money — it is a shell game,” Carlyle said.
But GOP leaders said most people would see their property taxes go down under the Republican plan.
The Senate GOP approach would institute a flat statewide property tax levy of $1.80 per $1,000 in assessed value, replacing the current system of varying levy rates from district to district. The new state levy would raise about $2 billion per year, while getting rid of about $2.4 billion collected annually in local school district property tax levies.
The GOP plan provides that by 2020, school districts could enact new local levies at much lower rates, if they get approval from the state Office of the Superintendent of Public Instruction. But those monies could be spent only on programs outside of basic education.
The plan is “a fair and clean way to do what we had to do to fix this problem,” said state Sen. John Braun, R-Centralia, the Senate’s chief budget writer.
The GOP model would replace the state’s current school funding formula with a set minimum funding level of $12,500 per student.
Districts whose tax base isn’t big enough to reach that minimum under the flat rate would receive additional payments from the state to make up the difference, Braun said. Those payments would cost the state about $1.4 billion every two years, which Braun said the state could pay without implementing additional taxes.
Lawmakers’ new two-year budget is expected to top $40 billion this year.
Republicans want to send their plan to voters for final approval, leaving open the possibility that voters could reject it and send lawmakers back to the drawing board.
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“This is an enormous change in the way we tax our citizens,” Braun said. “This is quite naturally something we would ask our voters.”
Under the GOP plan, the new statewide property tax rates will be fully implemented starting Jan. 1, 2019, with a transition beginning Jan. 1, 2018.
As part of the transition, the GOP plan would extend school districts’ ability to collect property taxes at current levels for another year.
Without that extension, school districts’ tax authority is set to go down in January 2018, creating a “levy cliff” that school districts say would force them to plan for dramatic budget cuts.
While Republicans have said they want to address the levy cliff as part of their larger education-funding plan, Democrats have urged GOP Senate leaders to consider a separate bill on the matter to give school districts certainty as they plan their budgets.
On Friday, Senate Democrats tried to take advantage of a temporary Senate tie to pull a bill to delay the levy cliff to the Senate floor, a move that would have bypassed Republican leaders. But the Democratic effort failed after Democratic Lt. Gov. Cyrus Habib ruled Democrats lacked enough votes to change the rules of the Senate, as well as lacking a quorum to pull off any other parliamentary maneuvers.
While much of the GOP tax plan could be rejected by voters in November, Braun said the parts delaying the levy cliff would remain in place even if the package fails.
Lawmakers have put about $2.3 billion in the past four years toward complying with the McCleary ruling. But they have yet to take on the full cost of paying teacher and school employee salaries, which many consider the most complicated piece of the decision.
State Sen. Sen. Christine Rolfes, D-Bainbridge Island, said while she was still reviewing details of the Republican plan, “we’re pleased we can start working on this with them.”
“They came to the table,” she said.
Rolfes said a bill encompassing Democrats’ school-funding plan is almost ready for release.
In a rough set of recommendations earlier this month, Democrats proposed raising the state’s average salary for a teacher in Washington to nearly $71,000, an idea the Republican plan doesn’t include. Democrats also didn’t recommend dramatic reductions to local school district maintenance and operation levies like Republicans are.
The Democratic recommendations called for $1.6 billion in new revenue over the next two years, and would cost more than $7 billion to fully implement through 2021.
Democrats haven’t indicated exactly how they’d come up with the money, but identified a few potential revenue sources, including taxes on carbon emissions and income from capital gain such as the sales of stocks and bonds. Democrats also said they’d be willing to look at ending tax exemptions and changing the state’s business and occupation tax to help come up with the money.
All of those tax options were included in Inslee’s proposed two-year operating budget, which would raise about $4.4 billion in new taxes and put $2.7 billion toward increased salaries and benefits for teachers and other school staff.
Both parties have recommended increasing what the state pays for a beginning teacher’s salary from $35,700 to about $45,000 per year.
Republicans, however, would ban teachers from going on strike, while limiting how much school districts can spend of their budgets on teacher salaries and benefits.
GOP Senate leaders also recommend repealing Initiative 1351, a class-size reduction measure voters approved in 2014, while Democrats have indicated they’d like to keep at least some parts of the initiative.
Both parties’ plans face obstacles in passing the full Legislature. While Democrats hold a narrow majority in the state House, a mostly GOP coalition controls the Senate.