Voices from the Idaho EdNews Community

Has HJR 3, passed in 1988 to reduce property tax, been successful?

Has HJR 3, legislation which was passed in 1988 to reduce property tax, been successful? The law was to reduce property taxes by using lottery money to fund education in place of property taxes.

I will leave it to the reader to determine if the lottery has reduced property taxes and has substantially increased funding for public education.
In 1988 a legislator induced HJR 3 to change the state constitution to allow for a state lottery. The constitution amendment was passed by a vote of the people and the law that created the lottery went into effect in 1989. In 2023 the lottery has been in effect for 34 years. This article will deal with the fiscal year from July 1, 2022 to June 30, 2023. All financial information has come from the State Department of Education and the annual report of the Idaho State Lottery Commission.
By state law as passed in 1988, 20% of the net income from the lottery was to be divided 50% between the Permanent Building Fund and 50% to the School Building Fund. It should be noted that by law the legislature can use the money from the lottery in any way that will benefit the public. In 2017 the legislature added the Bond Equalization Fund. This fund is used to pay down the principal and/or interest on bonds that have been passed by the voters of a district. Of the 183 districts only 58 districts received money from this fund since they are the only ones with bonds. The Permanent Building fund now receives 37 1/2% and the School Building Fund now receives 37 1/2% and the Bond Equalization Fund receives 25%.
For the purpose of this article I will be using approximate dollar figures. In fiscal year 2023 the approximate revenue from the lottery commissions annual report was $470,000,000 and expenses were approximately $320,000,000 with an approximate net income of $82,000,000. Based on this, the Permanent Building Fund received approximately $30,000,000 as did the School Building Fund and the Bond Equalization Fund received approximately $20,000,000. In 1988 the voters were sold on passing the constitutional amendment as they were led to believe all the money would go to the schools.
$30,000,000 dollars seems like a lot of money until you compare it with the total budget of the State Department of Education for all 183 school districts and Charter Schools. The total budget for 2023 was approximately $2,000,000,000 so $30,000,000 is 1 and a half percent of the total budget, this represents 37 1/2 percent of the $82.000.000.
I’m very concerned about how the legislature has underfunded our public schools over the past 34 years and continues to underfund public education. Currently Idaho is number 50 in the amount of money that is spent on public education. There are groups in Idaho who believe that public education needs to be replaced by the private sector. In the 2024 legislature this group attempted to pass legislation that would have given an $8000 tax credit to parents who send their children to private or parochial schools. This is more money than the state spends on a student. As I have shown, the lottery provides very little money for public education. Currently the majority of money still comes from property taxes and bonds if a school district can get one passed.
Currently, by state law, schools are funded using a method based on Average Daily Attendance. This method is calculated by averaging the number of students attendance over a 28 day period. In my opinion, this method may have been fair and equal when school districts were small. In today’s world it doesn’t make sense.
Our legislators have recognized that the amount of money needed to educate a child is at least $8,000 a year as this is the amount of money that was proposed in the proposed tax credit bill.
What our legislators should do is form a committee of stakeholders to determine the actual cost of providing a quality education for each child in Idaho. Another approach would be to determine at least the average cost per child from age 6 to age 18. Everyone needs to understand that our constitution is clear that it’s the States responsibility to provide a free public education. The state has consistently failed to provide the adequate funds to meet this requirement of the state constitution.
Everyone also needs to understand that school districts are competing with other taxing districts for the property owners money and that each of these taxing districts by state law receives a 3% tax increase every year. Every taxing district can ask the voters of a district to approve a bond or levy increase. School districts that have been successful in getting voters to pass tax increases are in urban areas which have wealthier property owners while rural areas are less likely to get voters to approve a tax increase. Another major issue is the money needed to  repair or replace facilities. Currently again money for repairs or replacement is based on Average Daily Attendance. This doesn’t make sense. A better way for funding repairs or replacement would be to establish a school building fund like the states Permanent Building Fund. If there was a statewide school building fund a committee would be established with people knowledgeable in determining what repairs are needed or if the facility should be replaced. They would be required to inspect and make recommendations as to the needs of all facilities in the state and prioritize which facilities have the greatest need. By doing this, large districts and small ones would be equal again and the state would be required to fund the School Building Fund.
This is a complicated question but the ultimate responsibility for insuring the funding of public education is up to people who as voters elect those who represent us in the state Legislature.
Edward A. Easterling is a Democratic candidate for Senate in district 24 and lives in Kimberly. 

Edward Easterling

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