By Attorneys Beth Grob, Ron Peeler and Jim Wainwright
Distribution of Sales Tax Revenue
The one cent state sales, services, and use tax has been extended from December 31, 2029 to January 1, 2051. The new law provides for an increase in the amount of sales tax revenue dedicated to property tax relief and also uses the revenue to fund career academy grants. The amount deposited in these funds can increase from year to year, but only if there is sufficient growth in sales tax revenues to meet statutory requirements. If there has been enough growth in sales tax revenues over the previous year, the amount dedicated to property tax relief will increase each year by 1% until it reaches a cap of 30.0% of the funds generated.
Revenue Purpose Statements
The legislature also imposed additional limitations on Revenue Purpose Statements (RPS) that will require school districts to carefully consider whether to adopt a new RPS. An existing RPS adopted before July 1, 2019 shall terminate on January 1, 2031 or the expiration date contained in the current RPS, whichever is earlier. If a school district intends to use sales tax funds for purposes other than property tax relief after its current RPS terminates, the board must submit a revenue purpose statement for voter approval on or after July 1, 2019. Any RPS submitted to the voters must include all proposed uses, including those previously approved by the voters, if applicable. The new law requires that the notice of election and district website contain a statement as to how sales tax revenues will be used if the new RPS is not adopted. Districts should carefully consider its school infrastructure needs (including the need to borrow beyond the existing RPS expiration date) and the level of support in the community before calling a new RPS election.
Sales Tax Bonds
Before issuing sales tax revenue bonds on or after July 1, 2019, school districts must publish a notice of hearing not less than ten (10) nor more than twenty (20) days before the public hearing. The issuance of sales tax bonds is also now subject to voter approval if a valid petition is received within fifteen (15) days of the hearing.
"School Infrastructure" and "Athletic Facilities"
The definition of "school infrastructure" was expanded to include "school safety and security infrastructure" and "information technology infrastructure." The legislature also added a definition for "athletic facility infrastructure projects" and stated its intent that each school district should prioritize the use of sales tax revenues for secure entries for the district's attendance centers before expending such revenues for athletic facility infrastructure projects. An "athletic facility" means a building or structure, or portion thereof, that is not physically attached to a student attendance center and an "athletic facility infrastructure project" means a school infrastructure project that includes in whole or in part the construction of an athletic facility. Before approving the use of any SAVE revenues for an athletic facility infrastructure project the board must adopt a resolution setting forth the proposal for the athletic facility infrastructure project and hold an additional public hearing on the issue of construction of the athletic facility. This is subject to voter approval if a petition for election is received within fifteen (15) days of the hearing.
This is only a summary of the changes made by House File 546. If you have questions about the impact of the new law or about this Client Alert, please contact any member of the Ahlers & Cooney Public Finance Practice Group.
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