House panel protects school building aid

BOISE – An attempt by legislative budget writers to roll back a state program designed to subsidize the cost of interest for school construction was turned back in a House committee Friday.

North Idaho lawmakers on the House Education Committee said the plan needed input from school districts. The measure would have eliminated future bond interest subsidies for seven North Idaho school districts, including Coeur d’Alene, East and West Bonner County, Plummer-Worley and Moscow.

“They were kind of blindsided by it,” said Rep. Marge Chadderdon, R-Coeur d’Alene. “I know it needs fixing, and they do too as far as the budget, but if we can go one more year, I think people would be a little more comfortable.”

The proposal, sponsored by Rep. Scott Bedke, R-Oakley, and co-sponsored by seven other members of the House Appropriations Committee – including two from North Idaho – would have cut off a third of the state’s school districts from the interest subsidies. According to a state index, those are the wealthier districts, Bedke said, that now receive the minimum 10 percent subsidy. Poorer districts get up to 100 percent of their interest subsidized. Bedke said the original idea was just to help poor school districts, but the 2002 legislation expanded it to include all districts to gain political support. When lawmakers passed the subsidy legislation in 2002, in response to a lawsuit from school districts over inadequate funding for school construction, they estimated that the subsidies would cost the state little in the short term, but as more districts passed school bonds over the years, its cost would rise to $16 million to $20 million a year after 20 years.

That lawsuit is pending and is expected to go before the Idaho Supreme Court this year. In 2001, 4th District Judge Deborah Bail ruled the state’s current funding system for school construction unconstitutional because it leaves poor school districts unable to provide safe school buildings for their students. The state has appealed that ruling to the high court.

In its first year, the bond-subsidy program cost $825,000. This year it was $2 million, and next year it’s estimated to cost $4.5 million. But so far, lawmakers haven’t put any additional money into schools for the program, opting instead to fund it from lottery profits that schools would have gotten anyway, and usually used to fix roofs, replace carpets and take care of other building maintenance needs.

Bedke said at this rate, the subsidy program will soon swallow up all the lottery profits, and that doesn’t benefit schools. He said he’d like to shift the funding for bond subsidies elsewhere, possibly to the state’s permanent building fund, but with the estimated future costs there wouldn’t be enough to cover it.

“I think we need to trim this thing up this year, so we have a chance next year to take it out of the public schools budget and put it someplace else,” Bedke told the committee.

His bill was co-sponsored by all the Republicans on the House Appropriations Committee, including Reps. Dick Harwood, R-St. Maries, and George Eskridge, R-Dover. That committee forms the House half of the Joint Finance-Appropriations Committee, which sets state budgets.

Bedke said the subsidy has prompted school districts to pass bigger bond issues for buildings with more “bells and whistles.”

Education officials disagreed. Lane Hemming, assistant superintendent of the Madison School District in eastern Idaho, said, “I build as much as I can possibly build, knowing that I can’t build what I need. It has nothing to do with a more grandiose building.”

Hemming, whose district is among the “wealthy” ones that would lose the subsidy, said his last bond issue failed with 56.2 percent voter support 18 months ago – short of the required two-thirds supermajority.

“This cutting of the 10 percent interest to us is a major, major, issue,” he said. “The average age of buildings in our district is 42 years. We need major remodeling. … We are growing, but our patrons are very wallet-retentive.”

Other school officials questioned such a major change coming up in the final days of a legislative session that could end as soon as this week. “Why the urgency?” asked John Eikum, executive director of the Idaho Rural Schools Association. “The earliest most of us heard about this was about a week ago.” A motion to pass the bill failed on a 3-14 vote, and the panel then voted to kill it for this session.

Rep. Frank Henderson, R-Post Falls, said, “I think at the base of the whole problem is the difficulty of passing bond levies, and fundamental to that problem is that our property tax system has not been amended and did not get addressed this year.”

Henderson said that by his calculations a half-cent local-option sales tax increase could cover all the principal and interest for existing construction bonds for the four school districts in Kootenai County. But the Legislature isn’t considering allowing that.

Two local-option tax bills, sponsored by Rep. Jim Clark, R-Hayden Lake, and Sen. John Goedde, R-Coeur d’Alene, never were given hearings, Henderson said. “Neither one got to the floor for a discussion. That is truly unfortunate.”