Photo courtesy of the state House of Representatives
Northshore School Board member Rich Baldwin testifies in Olympia in support of state Rep. Larry Springer’s proposed legislation that could increase funding for school construction.

State Rep. Larry Springer (D-45th District) proposed a change in state law that would result in the state being able to borrow more money than it can now.

Springer said, if passed, his proposal, House Bill 2170, would generate an estimated $100 million over the biennium for school construction.

“Every district anticipates some type of building campaign,” he said. “This money could be used for remodeling, rebuilding or new construction. Putting $100 million into school construction would help schools, kids and property-tax payers at the same time.”

The state portion of the real estate excise tax (REET) is deposited in the general fund.

There is language in the law, however, that prevents the REET money from being used in calculating the state’s debt limit. HB 2170 would eliminate the restriction on existing real estate excise taxes that prevents them from being used to increase bonding capacity for school construction.

According to Springer, in the mid-80s, state coffers paid about two-thirds of total school construction funding, with local property taxes picking up the other third. By 2001, local property taxes were paying about 70 percent of total school construction costs. Even though the state increased its share of these costs in 2003, local property taxes are still paying a far larger share of school construction costs than they paid 20 years ago, he said.

“Homeowners need property-tax relief,” said Springer. “Reducing the property-tax share of school construction would be a big help.”

Since the way to generate the $100 million is to borrow it, borrowing would mean an additional $8 million be taken from the general fund to pay down the debt.

Rep. Toby Nixon (R-45th District) said, “If we actually do borrow that ($100 million), it will mean that more money will be taken from the general fund for debt service, actually reducing the amount of money available for current-operating expenses. I am not necessarily opposed to the bill for that reason, but people need to understand that we will be enabling the state to go deeper in debt and spending more money on debt service than on teacher salaries, health care, and other current expenses, and make this decision with their eyes wide open.

“Increasing the debt limit doesn’t mean that we will automatically borrow the money. The legislature would retain the discretion later to choose to not issue new bonds if there are concerns about our ability to service the debt. But the recent pattern has been to borrow as much as possible …, and the bill to increase borrowing capacity wouldn’t have been offered if it wasn’t going to be used.

“I haven’t yet firmly decided how I will vote on this bill when it comes to the floor of the House, but these are the issues I’m thinking about now,” said Nixon.

Springer anticipated that use of general-fund money to pay down the debt might be a concern for some legislators.

He believes that potential savings from a proposed “green building” bill could generate enough to offset the money needed to service the debt.

Northshore School District Communications Director Susan Stoltzfus said, “Every dollar from the state for construction is one less we have to ask for in capital bonds.”

Northshore School Board member Rich Baldwin said, “HB 2170 is a small first step toward fixing a very large state problem in school construction funding. If the bill passes and the state makes use of its expanded bonding capacity, the Northshore School District may see a portion of these funds for school remodeling.”

Bill Panos, Director of Facilities for the Office of the Superintendent of Public Instruction, testified in favor of HB 2170. He said in a phone conversation, “The Superintendent and the State Board of Education support the measure. It means there would be more funds available for building and modernizing schools throughout the state.”

The estimated $100 million would not be divided amongst the state’s 291 school districts. Rather, it would be put into a state matching-grant program for school construction. The funds would be distributed in the same fashion as those matching-grant funds are currently being distributed, Springer said.

HB 2170 cleared its first major hurdle March 2 when it was voted out of the Capital Budget Committee, 21-5. It is on its way to the Rules Committee.

“I expect to see it on the floor fairly soon,” said Springer.

Springer, prime sponsor of the bill, said he worked with House Speaker Frank Chopp (D-43rd District) and House Capital Budget Chair Hans Dunshee (D-44th District) to develop the proposal.