OLYMPIA — Democratic lawmakers are inching closer to easing restrictions on how much school districts can collect in local property taxes.
Bills moving through the state House and Senate aim to lift the lids on those levies, which districts use to pay for staff, resources and programs not funded by the state.
These bills would reverse a course taken two years ago, when lawmakers struggled to provide ample dollars to public schools demanded by the state Supreme Court in the landmark McCleary lawsuit.
At the time, legislators increased the statewide property tax and distributed that money to districts to comply with the court order. In the same session, they set a hard cap on local levies, figuring the amount of additional state dollars districts received would offset any loss of local tax revenue.
The swap hasn’t worked out smoothly. Many districts are now wrestling with gaping holes in their budgets for the next school year and are eyeing program cuts and layoffs.
“I think in the McCleary fix we screwed (the levies) down too tight,” said Rep. Laurie Dolan, D-Olympia, a sponsor of the House bill. “What you see us doing now is to give them that flexibility back.”
Republican lawmakers oppose the measures in both chambers. They contend what’s proposed will once again create funding inequities between districts. And, over time, districts will become too reliant on the operating levies, a situation the state Supreme Court called out as problematic in the McCleary case.
“Why do you think this is different?” Sen. John Braun, R-Centralia, said in the first hearing on the Senate legislation in February.
In 2017, the state told districts that they could collect no more than $1.50 per $1,000 of assessed value or $2,500 per student — whichever was less.
Under House Bill 2140, districts would gain a couple of options.
They could collect the lesser of $3,000 per pupil or $1.50 per $1,000 of assessed property value. Or they could take in an amount equal to 20 percent of the state and federal funds received for the 2018 school year.
Under Senate Bill 5313, a district with fewer than 40,000 students could collect the lesser of $2.50 per $1,000 of assessed value or $2,500 per student. Districts with more than 40,000 students could take in the lesser of $2.50 per $1,000 of assessed value or $3,000 per student.
Both approaches are promising for administrators who had to leave millions of voter-approved tax dollars on the table when the state imposed the lower lid.
“The two proposals both help Edmonds,” said Lydia Sellie, executive director of business and finance for the Edmonds School District.
The district will pull in $48 million in local funds this calendar year, down from $67.2 million in 2018. Right now the district is looking at having to shave between $17 million and $18 million from its next budget.
“The shortfall assumes they do nothing,” she said. “If they do something, they will reduce the shortfall by $2.4 million to $2.7 million. That goes a long way to retaining staff and programs.”
Jeff Moore, finance officer for the Everett School District, said, “Under either bill, Everett believes it will give us the authority to collect what our voters have already approved.”
He urged lawmakers to offer the most options.
“It is so complex. No one-size-fits-all formula will work,” he said.
Officials at the Mukilteo School District said the debate on the levy lid “is missing the whole point” as districts still cover some costs of basic education, such as special education.
“By state law, the money raised through the local levy is for enrichment activities only. It’s not for basic education. Yet we are paying for basic education out of our levy funds,” spokesman Andy Muntz said in an email.
With three weeks to go in the legislative session, there’s no guarantee lawmakers can reach an agreement on changes.
Some lawmakers think it’s too soon to tinker with the rules. There’s lingering frustration with school districts which, after getting an infusion of state dollars in 2018, negotiated double-digit raises for teachers. Now those same districts are planning for layoffs due to a lack of money and want the state to help bail them out.
Republicans argue that easing the rules will lead to property owners paying more in school taxes as districts move to maximize the revenue they collect. Collectively, the proposed policies could increase up to $800 million in local tax dollars to districts, according to legislative reports.
Meanwhile, in the Senate, changes made by the Ways and Means Committee around 1:30 a.m. Wednesday added a wrinkle. They would limit the size of pay raises that districts could give teachers out of those local tax receipts.
The leader of the statewide teachers union said such a move would take away the rights of districts and teachers to collectively bargain wages. And, she said, it could ultimately result in teachers earning less pay.
“It’s completely disrespectful to educators and to students,” said Kim Mead, president of the Washington Education Association and an Everett School District employee.
Sen. Marko Liias, D-Lynnwood, a committee member, said he wasn’t comfortable with the bill or the amendment. But there’s time to iron out issues, he said.
“I don’t really like the details of our proposal, especially the amendment. I held my nose and voted to keep the bill moving,” he said. “This is something that definitely needs a lot more conversation and a lot more negotiation.”
Rep. June Robinson, D-Everett, vice-chairwoman of the House budget committee, said she thought the sentiment among her colleagues is to do something.
But crafting a policy for 295 districts with unique financial challenges isn’t simple, she said.
“I believe the districts need some flexibility. I will certainly support a change,” she said. “It’s finding the sweet spot that will be the challenge.”