by Logan Finney, Idaho Reports

Lawmakers on the House Revenue and Taxation Committee gave their blessing Tuesday to a highly anticipated funding bill, which would send approximately $1 billion to Idaho communities for local school buildings.

“I want to thank the governor and his staff for working with us on this,” said House Speaker Mike Moyle, R-Star.

Moyle is a lead sponsor on House Bill 521, which Gov. Brad Little teased in his State of the State Address and the committee introduced earlier this month. The bill would allow the state to bond for $1 billion and distribute those proceeds out to school districts for their facility modernization needs.

“The state will bond for it up front, and then distribute that directly out to the districts,” said House Majority Leader Jason Monks, R-Meridian, another HB 521 sponsor and the prior tax committee chair.

In addition to selling a large state bond for buildings, the bill would also increase the funding that school districts started receiving for property tax relief under last year’s House Bill 292.

“I want to emphasize that this is a tax cut bill,” Moyle said. “It reduces income taxes; it reduces property taxes. It takes sales tax and provides a mechanism whereby we can start supplying funding to our school districts to build buildings.”

Schools can already use the property tax relief money under last year’s bill to pay down their existing bonds, supplemental levies, and maintenance and construction needs. HB 521 would allow more flexibility there, add plant levies to the list, and increase the annual distribution by $75 million.

“It’s one of those bills everybody has something to love and hate in it, so it’s probably a good bill,” Moyle said.

After the bond sale, school districts would be able to take their share of the proceeds annually over the ten years for those same facility priorities. Alternatively, they could take the money as a lump sum for identified construction, renovation, or maintenance needs.

“This is a good bill. I’m not sure there’s a whole lot to hate in this one,” Monks said. “Our property tax is made up, statewide, about 30% of it is on school bonds and levies. In some places in the state, it’s 50% of your local property taxes.”

If signed into law, $25 million of the increased property tax relief coming through the HB 292 formula would be new funding from annual sales tax revenue. The other $50 million would come from redirected bond-levy equalization funding that districts already receive from the state lottery.

“This is a good deal,” Monks said. “This is good for Idaho. This provides property tax relief, it provides income tax relief, and it provides additional money for school facilities.”

Andy Grover from the Association of School Administrators spoke Tuesday in support of the legislation. He applauded lawmakers’ efforts over the past few years to get local property taxes under control.

“As you can see by the length and the depth and the breadth of everything in this, it’s taken a lot to get here. I also want to say that House Bill 292 from last year was a huge success,” Grover said. “This is the first real attempt, I think, from the state standpoint – since I’ve been in this industry, which has been quite a while – that we’re really trying to address the fact that facilities cost a lot of money.”

Several people at the hearing referenced an Office of Performance Evaluations report that pegged Idaho’s school facility needs at more than $1 billion. Even that figure is based on a now-outdated assessment.

“In the report from the 1993 assessment, it was found that school districts statewide had a total of $699.5 million ($1.3 billion when adjusting for inflation to 2020 dollars) in needed building repairs, additional facilities, or upgrades,” the 2022 OPE report found.

Lori Fraser, board chair of the West Ada School District, spoke not for her district but on her own behalf. She expressed gratitude as well at the state being willing to help districts pay for school buildings.

“Without proper funding, they will continue to deteriorate, and what was once repair will become replacement, with an obviously much higher price tag,” Fraser said. “HB 521 isn’t perfect, but it’s an excellent start.”

Melba school board member and past Idaho School Boards Association president Jason Knopp also supported the bill, but he cautioned it will not be enough to address all the issues in every district.

“While again, this is a huge and important investment, it simply will not exclude the reality that most districts will still have to go to their taxpayers to build new schools,” Knopp said. “It costs $25 to $30 million to build an elementary school, whether you live in Boise or Bancroft or Bonners Ferry.”

Speaker Moyle was quick to remind the committee that HB 521 would not address all of the facilities needs across the state – just as HB 292 last year did not address the entire property tax issue.

“Our locals started increasing budgets. You saw letters from some school districts saying, ‘Hey look, the state gave you some money, so pass a supplemental,’” Moyle said. “Our intention was not to provide a mechanism to continue to raise taxes, and I have the same concern with this bill.”

Education advocates, however, argued they continue to run bonds and levies on the ballot because they must, not because they want to keep raising property taxes.

“The direction we’re going is working. We just have to continue down that path,” Grover said. “Running levies and bonds is not a ton of excitement for us to do.”

Chris Parri from the Idaho Education Association expressed similar concerns about future ballot questions.

“It’s been no secret that the state of our school facilities have lagged behind the ambitions of our people. Idahoans watch as the buildings at the heart of our communities age, crumble, leak, freeze, and burn,” Parri said. “House Bill 521 is not a panacea, as you’ve heard. Many communities will still rely on bonds and levies to meet their commitments to students – and removing local control over the August election date doesn’t help that problem.”

House leaders, however, are bullish at the possibility of sending even more money to districts in the future through these new formulas for buildings.

“I would rather that we [as the Legislature] provide that funding,” Monks said. “I would love to be able to get rid of the ability to even go to the voters – but in order to do that, you have to provide the money.”

The bill would additionally give the governor the power to appoint the president and executive director of the State Board of Education, positions which are chosen by the board members today.

“If we’re putting a billion dollars into this, with the governor’s office, we needed to have a little bit more accountability,” Monks said.

HB 521 would also put limits on school districts’ ability to shift from a five-day school week to a four-day week if they accept the state funds, which raised concerns from a few committee members.

“We’re not saying that you can’t do it,” Monks said. “The State Board of Education by August 1st is going to implement some standards.”

Public testimony expressed uniform support for the state stepping up to fund school buildings, but some people hesitated at all of the accountability measures that sponsors have tied to the overall $2 billion investment.

“The things that make it harder to pass a bond, like taking away the August election date, they are permanent,” said House Assistant Minority Leader Lauren Necochea. “I think this is one step forward, but also a big step back with this permanent income tax cut – again in the style that disappoints me, where it’s totally upside down.”

Necochea, D-Boise, also asked about the Idaho Constitution’s requirement that lawmakers only address a single subject in each piece of legislation.

“This is a tax bill. This is tax cuts, all the way around,” Monks said. “That’s why it’s in this particular committee.”

The sponsors’ justification – that the bill broadly addresses taxes, and the revenue that Idaho uses to support its public schools – was apparently not enough to assuage Necochea’s concerns.

“I’ve heard this called a facility bill; I’ve heard it called a tax bill. I’ve heard it called a lot of things,” she said. “I just don’t think we’ve ever mucked around with how the State Board of Education president is appointed in the House Revenue and Taxation Committee.”

Necochea was the sole committee member to vote against sending the bill to the full House.

“I understand that this is the legislative process, and we’ve got to make some sausage,” said Minority Caucus Chair Ned Burns, D-Bellevue. “There’s a couple of flavors in the sausage that I’m not super keen on, but not enough to make me vote no.”

Republican lawmakers were generally more enthusiastic in their support of HB 521, though not without a battery of policy questions for the sponsors.

“I would never argue against a tax reduction – but the last time we changed the effective rate was the fall of 2022, moving from a tiered system to a flat tax. Here we are in spring of 2024. It’s a very short period of time between those two changes,” said Rep. Jerald Raymond, R-Menan. “Do we know where we are based on coming out of the COVID bubble, and changing things rapidly?”

Monks assured the panel that they can always come back and adjust income tax rates in the future if the proposed reduction is overly optimistic.

“We should not allow perfect to be the enemy of good,” said Rep. Kenny Wroten, R-Nampa, “I think this moves us towards our constitutional responsibility toward our public schools. I think we’re doing a lot of good things here.”

In addition to the $1 billion bond, and the boosted property tax relief, HB 521 would also set up a model school facility council to study how the state could possibly offer boilerplate building plans in the future.

“Will that still allow districts and communities to identify themselves?” asked Rep. Doug Pickett, R-Oakley. “Will all schools in Idaho look the same?”

The study council would be charged with submitting a report to lawmakers by July 2026 with a clear plan for standardization and variability of elementary school, middle school, and high school model buildings. The State Board of Education’s executive director would serve as the chair of the model school facility council.

“The committee would come up with a plan,” Monks said. “That plan then would come before this legislative body, and we would say we like that plan, or no, we don’t like the plan, because it didn’t allow for enough customization.”

Idaho Association of Counties executive director Seth Grigg told lawmakers that county clerks and treasurers greatly appreciate the adjustments that the bill would make to HB 292’s administrative timelines, as well as the funding it would provide for child protection cases under the state’s new public defense framework.

“The additional $3 million that this bill provides will ensure that there is adequate legal representation for those going through these proceedings,” Grigg said. An associated policy bill has been introduced in the Senate.

Staff from the governor’s office told members of the press corps they plan to release a spreadsheet with information on how much funding HB 521 would provide to each school district. Those figures were not finalized by the time of the hearing on Tuesday.

“I have a lot of concerns with this legislation,” Necochea said. “I think it starts with a lot of unanswered questions about how individual school districts are even going to be impacted.”

Light applause drifted from the audience after the near-unanimous vote to send the bill to the floor. Idaho School Board Association members at their annual capitol lobbying day made up the majority of the crowd in the committee room.

“This top priority bill proposes the largest investment ever in school facilities and lowers income taxes even further. It also has the added benefit of long term property tax relief because the state is footing the bill for many improvements local property owners would otherwise cover,” Little said in a news release after the hearing. “Thank you, legislators, for putting kids and families first!”

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