HB 350-PUBLIC SCHOOL FUNDING: LOCAL CONTRIBUTION  8:34:51 AM CHAIR SEATON announced that the next order of business would be HOUSE BILL NO. 350, "An Act relating to the local contribution to public school funding; and providing for an effective date." DAVE JONES, Assistant Superintendent, Kenai Peninsula Borough School District (KPBSD), informed the committee that legislation enacted in 2001 created a disparity in local mill levy equivalents and a serious equity issue among school districts; however, HB 350 would resolve the equity issue. Historically, his school district has been "funded to the cap," thus local support provided by taxpayers has increased significantly. The bill would lower the [local maximum allowed by law] and provide local taxpayer relief without a revenue loss to the school district; therefore, he related that the KPBSD school board is in strong favor of HB 350, and would like to see the bill move forward. 8:37:16 AM GEORGE TROXEL, Superintendent, Mat-Su Borough School District, paraphrased from a prepared statement, which read as follows [original punctuation provided]: House Bill 350 reduces the revenue available to the Mat Su School District without increasing local taxes, and furthermore, that impact is exponential over coming years. I don't support HB 350 for that reason. The Mat-Su School District is experiencing financial hardships due to the general nature of expenses rising faster than revenues in these times. Given this scenario, the Mat-Su and two other Districts in the state are singled out by HB 350 to get a double whammy in the area of revenue shortfalls. The Mat-Su School District has a growing enrollment, over 800 students in the last three years. The District did realize revenue enhancements generated by the growth. Revenue increases received because of increased enrollment take care of day-to-day expenses but not the expenses of more general support and infrastructure, such as buildings, grounds, furnishings, and equipment. In the past 10 years as many new schools have been opened in the Valley. The opening of new schools has tremendous impact on annual budgets. In the Mat-Su we plan approximately a million dollars above the usual annual operating costs for that first year a school is open. Growth in the Valley is a good thing for the State of Alaska, growth has its costs, and while the Valley appreciates the Stat's support in handling this growth that help is also an expectation for which the state as a whole realizes dividends. New schools are needed in the Valley. These new schools will further stress the property owners capacity to keep up with increasing demand for more tax dollars to build these schools. The District currently uses 61 portable buildings for classrooms. These house close to 2000 student full time equivalents. Bonds will need to be passed in the near future that will rely on subsequent tax increases to construct these needed schools. House Bill 350 ultimately puts the askance for more dollars from property owners in the Mat-Su. The valley is not a home to major or great amounts of industry. Many of our taxpayers are those who can least afford more and more property tax increases. Median incomes for most who work in the Valley are on the low end of the scale. Multiply that by the fact that a sizable percentage of gross property value in the Valley is not a result of newly developed property resulting from growth, but rising property tax assessments on existing property. When higher tax assessments come about because of increased value of a property, the long term property owners become victims. Just because a property's value increases it does not follow that a property owner's ability to pay more in taxes increases. All of us are in dire budgetary circumstances with more and more challenges. This is not the time to change formulas for funding where anyone loses while others are experiencing substantial gains. 8:40:56 AM CHAIR SEATON asked for clarification on how HB 350 would reduce the revenue available to the Mat-Su School District without increasing local taxes. He observed that the intention of the bill was to lower the mill rate across the state. 8:41:38 AM MR. TROXEL explained that HB 305 changes the base year from 1999 to "one year in the past." Due to the increase in property values, even though the mill rate remains constant, the dollar amount of the assessment is greatly increased. In future years to maintain funding, those dollars would be provided by local taxpayers. 8:42:39 AM CHAIR SEATON pointed out the intent of the bill was to assign all of the municipalities across the state the same mill rate required for local contributions. He surmised the mill rate was not Mr. Troxel's concern. 8:43:28 AM MR. TROXEL said he is not opposed to a 2.7 mill rate, but the shifting of the base year to a more recent year with higher property values, results in a substantial increase in the local contribution. CHAIR SEATON restated Mr. Troxel's objection to the bill was regarding the change from a fixed base year, with new growth taxed at 50 percent, to a rolling base year. 8:45:19 AM MR. TROXEL said yes, and added that the relevant provision is in Sec. 4 of the bill. 8:45:57 AM COLLEEN VAGUE, President, Mat-Su District School Board, informed the committee her school district has built eight new schools in the last ten years. Each school was financed by homeowner bonds that increased taxes for homeowners. She noted that three of the new elementary schools are now at, or over, capacity and the district lacks sufficient buildings to house and educate its school population. In addition, at the current growth rate, the district will be further behind in five years. Ms. Vague pointed out that the increase in student population does not result in more money for school construction; in fact, the student population in the Mat-Su School District increased from 12,699 students in 1999 to the present count of 16,673 students. She reiterated the school board's opposition to Sec. 4 of the bill. 8:49:29 AM CHAIR SEATON stated that HB 350 would be held over.