Sinking fund bill passes House

*After some floor dramatics last week, the state House succeeded in passing HB 4313, which expands what school districts can purchase with sinking funds.* Opponents of the bill, mostly Republicans, argued to no avail that it would constitute an increase in property tax rates that required a super-majority vote in both houses. Other attempts to amend the bill at the last minute also failed. Even so, the legislation passed on a 74-35 vote, with eleven Republicans voting in favor while three Democrats voted against the bill. The bill now heads to the Senate, which allowed similar legislation to die at the end of last session. Sinking funds are special capital improvement funds that are directly funded by property taxes rather than a bond issue. School officials argue that sinking funds let them make ongoing capital improvements and renovations without having to wait ten or twenty years for a major bond issue. Because they do not involve borrowing money through bonds, advocates say, schools can accomplish more without asking taxpayers to pay for interest costs as well. Current law allows schools to use sinking funds for a narrow set of tasks, including major building renovation and the purchase of property. School officials have been asking for some years that this definition be expanded to include any expenses which are allowed under bond issues; they were especially interested in adding school buses and technology. Advocates argued that buses and technology had to be replaced on a much shorter cycle than the typical bond issue, forcing them to use precious operating funds for those expenses. When the bill was introduced by Rep. Mark Meadows (D-East Lansing), its language simply allowed sinking funds to be used for any purpose approved for bond issues. As the bill emerged from committee, its scope was narrowed so that only buses and technology were added to the approved uses of sinking funds. ("See our earlier story here.":http://www.miparentsforschools.org/node/108) Sinking fund millage requests that included bus and technology spending would have to be renewed at least every ten years, as opposed to every twenty years for existing sinking fund millages. Sinking fund millage proposals must be offered at the regular May or November election dates, according to the bill in its final form. There was some drama on the House floor last Thursday, as the bill was advanced to a third reading. The Democratic leadership, hoping to vote on the bill that day, allowed the Republican minority to tack on several amendments to the bill which would then be stripped out with a "substitute" amendment backed by the majority - a common procedural tactic to allow opponents to have their say before they are outvoted. Rep. Tom McMillin (R-Rochester Hills) offered an amendment that would tie the fate of the bill to one he is sponsoring (HB 4490) that lifts the cap on the number of charter schools. Rep. Paul Opsommer (R-DeWitt) proposed a change that would require schools using sinking funds to implement a merit pay system for teachers and administrators. Finally, Rep. John Walsh (R-Livonia) tried again to exempt industrial and commercial personal property from taxes destined to fund buses and technology; a similar change had failed in the Education Committee. There was a dust-up as Republican members complained that they had wanted to speak to their individual amendments on the record, and not just to the final version as the House Democratic leadership had agreed. Sergeants at arms circled leaders of both parties as they held a spirited discussion in the middle of the House floor before voting was halted. At the House's next session the following Tuesday, Republican members offered many of the same amendments again, but they all failed. The minority leadership also argued that, under the Michigan Constitution, the bill would require a three-quarters vote to pass because it "increased the statutory limits for ad valorem property taxes" for schools. That approach also failed, and the bill passed in the final vote. According to the House Fiscal Agency, nearly half of all Michigan school districts levy mills for a sinking fund, although most levy under 2 mills and only twelve districts currently levy the maximum 5 mills.