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October 2, 2015

Dear Friends and Neighbors,

In my last e-newsletter to you on Sept. 10, I gave an update regarding the historic funding levels the Legislature provided in the 2015-17 budget cycle for K-12 education. I also told you that despite these record-breaking education funding levels, the state Supreme Court said these efforts still fall short of its directive under the McCleary decision “to make ample provision for the education of all children residing within its borders.”

We all want the best education for our children. The Legislature has been diligently working the past four years to meet the expectations of the McCleary decision by significantly increasing funding and enacting reforms. But the Supreme Court's concerns are not confined only to the amount of funding for public schools. The high court has also said the state has failed to provide an adequate method of funding. That is part of the reason why it is fining the state $100,000 a day because the funding method falls short for our schools. As a result, schools have been relying too heavily on local property tax levies to make up the unfunded gap in basic education costs such as teacher salaries, transportation and operating expenses.

Local school levies – One of the state's most regressive taxes

Many of my colleagues in the Legislature, Republican and Democrat, believe the time has come to address the issue of school levy reform. The local school levy is one of the most regressive taxes in Washington, where areas of the state with the lowest property values pay the highest amount of property taxes, while areas with rich property values, such as Seattle and Bellevue, pay less than 30 percent of the median tax rate.

Opportunities for a quality education for our kids should not be dependent on their ZIP code. Every child should have an equal opportunity for a great education, whether they live in Bellevue or Sultan.

Levy swap – An option for a dependable tax source for education funding

One of the solutions under consideration is the so-called “levy swap,” which would implement a revenue-neutral swap of state property tax for local levies. A levy swap is a means of allocating significant new state funding toward K-12 basic education obligations by lowering local maintenance and operating levies while simultaneously increasing state revenues. The idea isn't necessarily to grow the pot of money available, but rather to shift the source of the dollars from local school districts to the state.

Here's the basic concept of how a pure property tax levy swap might work:

1. Increase the state property tax rate to $3.50 per $1,000 assessed value in 2019. (The current 2015 state property tax rate is $2.19 per $1,000.)
2. Distribute this revenue to the local school districts.
3. Reduce each school district's local levy authority by the amount gained in state funding.

The total tax revenue would remain roughly equal, but most of the funding would be collected and distributed at the state level, which would eliminate the huge inequities between school districts.

The numbers above are just for purposes of example. In fact, there are a few levy swap proposals being discussed, so those numbers vary. The impact to the 39th District would depend entirely on which proposal moves forward. So at this point, it is premature to provide specific figures of how your property taxes might be affected under a levy swap proposal.

Generally speaking, however, many people could see a net decrease in their property taxes under the levy swap concept. Property rich areas, such as Seattle and Bellevue would pay more, while areas with lower property values would pay less than they do now.

The use of the “new” state tax dollars from a levy swap would likely meet the state Supreme Court's requirement of a “dependable and regular tax source” as these funds would not require local approval and reauthorization. Plus, the same tax rate would be equally applied across the state, guaranteeing every student will get the same quality education, regardless where they live in Washington.

I hope this e-mail update has helped to provide additional understanding about the next possible step of education funding to address the McCleary decision requirements. Please feel free to contact my office with your questions and comments.

In your service,

Dan Kristiansen