Friday, January 6, 2006

Threat to school funds outlined

Legislators warn property tax reform could deplete state's education funding


By MEGAN THOMAS
Express Staff Writer

(Left) Liz Schwerdtle, of Hailey, emphasizes that property taxes offer the most stable source of funding for education in Idaho. (Right) State Rep. Wendy Jaquet, D-Ketchum, discusses the possible impacts of proposed property tax reform on education. Photo by David N. Seelig

With the 2006 Idaho Legislature set to convene next week at the Capitol in Boise, lawmakers face pivotal decisions regarding educational funding.

And, in light of proposed property tax reforms, the three-member District 25 delegation gathered with teachers, parents and administrators Wednesday, Jan. 4, at Wood River Middle School in Hailey to address the possible effects of tax reform on educational funding if new measures are enacted.

"I believe the Legislature is going to do something with property taxes," said Sen. Clint Stennett, D-Ketchum.

To make their constituents aware of possible threats to education funding stability, Stennett. Rep. Wendy Jaquet, D-Ketchum, and Rep. Donna Pence, D-Gooding, met to inform residents of proposed tax reforms. The meeting also provided details of Jaquet's proposed bill that would offer property tax relief, while maintaining a stable source of funding for education.

Property tax reform could directly affect educational funding across the state. Property taxes are a major source of revenue for the state's school districts. Legislators, educators and parents in attendance at Wednesday's meeting voiced fears over losing the most stable source of funding for education.

"The reality is we are putting every child at risk as we move money over to unstable funding," said Blaine County School District Superintendent Jim Lewis.

At issue is a proposal to cut the property tax rate for schools in half from .3 percent to .15 percent. A homeowner currently pays .3 percent on the assessed value of his home. The recommendation proposes to replace half of the funding currently supplied by property taxes with state-collected income and sales taxes.

"It truly will affect every student in the state ... The more we move from property tax to sales and income tax, the more we will run into rough water," Lewis said.

The plan alarmed representatives, educators and parents in attendance, largely because income and sales taxes are more sensitive to fluctuations in the economy.

"The property tax is by far the most stable source of tax for our schools," said Liz Schwerdtle, of Hailey.

A demand for property tax reform emerged as property owners started to witness a surge in assessed values across the state. As the assessed value of a home increases, a homeowner pays greater property taxes if his levy is not reduced at a comparable rate.

Jaquet, a member of the House Revenue and Taxation Committee, plans to introduce a bill to maintain the property tax rate for schools at .3 percent of assessed value.

"Stability is just as important as the level of funding," Stennett said.

The Idaho School Boards Association supports maintaining the tax rate at .3 percent. The current .3 percent rate was lowered from .4 by the state Legislature in 1995. With the decrease, the state promised to replace the lost revenue with replacement funds. In 2004, the Legislature voted to cap the replacement funds at $75 million. Jaquet's plan also calls for lifting the cap on the replacement dollars.

The bill would offer property tax relief by raising the homeowners tax exemption from $50,000 to $100,000, or 100 percent of the land value. The exemption would reduce property tax payments, as a mitigation tool, rather than destabilizing the educational funding source, Jaquet said.

Lawmakers requested that those in attendance contact friends across the state to inform them of the possible impacts of property tax reform on education.

"This is grassroots at its best," Jaquet said.




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