Committee critical of cap outlay compromise

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Committee critical of cap outlay compromise

Three sessions over a three-day span resulted in a three vote difference on a bill adjusting capital outlay.


On a 9-6 vote, members of the House Taxation committee sent House Bill 1207, which would have limited revenue collection of the school district capital outlay fund, implemented opt-out procedures for the fund and added $72 per-student to state aid, to the 41st legislative day.


The committee held the initial hearing for HB 1207 on Tuesday (2/17) and had two sessions on Thursday (2/19) to discuss the bill before taking the vote just before 5 p.m.


The change proposed limiting revenue growth on the capital outlay fund to three percent or inflation, whichever is higher, plus new construction, instituting a base levy for capital outlay of $1.50 per $1,000 valuation with schools at their 2014 capital outlay level, but the levy would drop on a gradual basis due to the limit on revenue.


Michael Houdyshell of the S.D. Dept. of Revenue said the bill “slows down the growth of capital outlay taxes” and would provide taxpayers relief in the long term.


HB 1207 developed after nearly a year’s worth of negotiating between the governor’s office, legislators, representatives from the ag community and educational groups, including ASBSD, because of claims by government officials of an impending tax payer revolt due to the levy’s routine growth.


“I think it’s critical that something happen this year,” Houdyshell said. “There’s a solution.”


HB 1207 also included a mechanism for school districts to opt-out of the levy for funding above $1.50 per $1,000 of valuation and provided a $72 ongoing increase per-student to the per-student allocation.


Three amendments were added to HB 1207, including making the flexibility to use 20 percent of capital outlay dollars to pay for certain general fund expenditures permanent in 2018 and beyond, a clause to repeal HB 1207 in 2020 and allowing a district’s bond redemption levy amount to be added to the capital outlay levy once the redemption levy had run its course.


“Schools aren’t enamored with this idea of limiting capital outlay,” ASBSD Executive Director Wade Pogany said, adding the Association supported the bill because of the compromise pieces.


Members of the ASBSD Board of Directors agreed to support the bill earlier in the week so long as compromise pieces remained. ASBSD was joined by the S.D. Large School Group and the Sioux Falls School district in supporting the compromise effort. A group of administrators did testify in opposition.


Ultimately, the many moving pieces of HB 1207 did not sit well with a majority of House Taxation committee members.


“It’s not ready,” Rep. Mark Willadsen said of the bill.


For updates on other legislation related to capital outlay, check the ASBSD Blog, Bill Tracker page and Twitter feed.

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