OKPOLICY.ORG
Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.
It was announced by Governor Fallin last week that SQ 801 will be placed on the general election ballot this November. SQ 801 is a referendum from the legislature intended to change the Oklahoma Constitution regarding how certain property tax money can be spent. Under the current constitution there is a 5-mill levy on all real property in a school district, dedicated to building and maintaining school property. In addition, there is a 35-mill general school tax and a 4-mill county levy that goes to school operations. So, legislators want to change the 5-mill levy to allow school districts to use property tax revenue that has previously been restricted to building and maintaining schools for operation funding. One mill is $1 per $1000 in assessed value. Assessed value is between 11 percent and 13.5 percent of the fair market value of the property, depending on the assessment ratio set in the county.
To put this in perspective, about 68 percent of the ad valorem (property) taxes we pay goes to schools, and that makes up, on average, about 27 percent of a school district’s budget. (Schools can also borrow money by issuing bonds which adds to the property taxes in each district). The remainder of the schools’ money comes primarily from state and federal funding, mostly state aid. So, the 5 -mill levy with which SQ 801 deals is a tiny portion of total school funding. It was restricted in the constitution to a “building fund” to make sure school districts had enough regular funding to maintain their school property.
When the resolution (SJR 70) creating SQ 801 was introduced in the legislature last year legislators were on the lookout for any money they could find for teacher salaries and other school operating expenses. So, they cast an eye toward moving some local funds from buildings to operations. The argument in the legislature for submitting SQ 801 to voters was to give local districts more flexibility in how to use the property tax funding. I think the feeling was that with the shortage of state funding maybe districts would want to use part of the building fund for operations. Opponents of the measure argued it was simply moving money around without adding more funding for schools.
It will be interesting to see what the people do with SQ 801. Both school funding and property taxes are complicated. Giving flexibility to local school districts is a pretty strong argument. On the other hand, property taxes are toxic for many people in Oklahoma. If voters conclude diverting current property tax revenue from buildings to general school operations might cause proposals for future bond issues for those buildings, they may decide not to grant that flexibility to school boards. Or, it might just slide right by in the midst of a heated general election.
I think there needs to be a little more information here. First, what portion of the building fund is currently expended for building and maintenance of properties (I know it will vary but…), and are these funds expended every year or are they held over if not used?
What would happen if this fund was used and absorbed into operating expenses, and then there was no funding for building and maintenance?
Is it possible to allow a portion of that money be used for operating expenses and require a portion be retained for the building and maintenance fund?
I understand the need for some flexibility in how to use available funds, but I also know that when funds are tight, and protected funds are no longer protected, short term issues are more easily met, but long term needs such as new buildings, new roofs, etc get put off, because they seem to intangible and less necessary at the moment. Then the moment comes and there has been no provision for them.
So I am not sure where I stand on this issue, perhaps somewhere in the middle.
Very smart comment.