Could a 1997 ballot initiative phase out Idaho's school maintenance-and-operation property tax levy without specifying how the lost revenue would be replaced?

Plain-English summary

Despite the file slug, the actual subject of this certificate is the proposed Initiative Regarding Incremental Property Tax Relief filed by Laird Maxwell on June 12, 1997. The initiative had two parts. Section 1 would create a new Idaho Code § 33-801B phasing out the school maintenance-and-operation (M&O) property tax levy: the maximum cap of three-tenths of one percent of market value (set by Idaho Code § 33-802(2)) would drop to two-tenths in 1999, one-tenth in 2000, and zero after that. Section 1 also expressed a non-binding preference that the legislature "should" provide replacement funding from state sales tax revenue. Section 2 of the initiative made a non-binding recommendation referencing draft legislation identified as RS07175.

Deputy AGs Ted Spangler and Carl Olsson, writing for AG Alan G. Lance, worked through the practical implications. The phaseout would reduce and eventually eliminate one of the two main pots of public school funding (the local property tax levy) without guaranteeing replacement, leaving districts dependent on whether and how the legislature chose to redirect general fund revenue. The opinion suggested the petitioner add an explicit cross-reference to Idaho Code § 33-802(2) so that the initiative would not be misread as cutting other school levies, such as the supplemental M&O levy authorized by Idaho Code § 33-802(4).

The opinion also flagged that the proposal could not affect charter school districts, drawing on Bagley v. Gilbert, 63 Idaho 494, 122 P.2d 227 (1942) and Howard v. Independent School District No. 1, 17 Idaho 537, 106 P. 692 (1910). Charter school districts can be amended only by special legislative acts that specifically reference the charter; a general initiative would not reach them.

Beyond the practical drafting issues, the AG noted a structural concern: Idaho's existing school funding formula in Idaho Code § 33-1002 is built on the assumption that some districts have higher aggregate property values than others, and the formula equalizes the resulting per-student spending disparities. If the M&O levy disappeared and was replaced by a flat sales-tax-funded distribution, the rationale for the existing formula could fall apart, depending on how replacement funds were distributed.

Section 2's reference to draft legislation RS07175 had no legal effect at all. Voters approving the initiative would only be presumed to have asked the legislature to consider RS07175. There would be no enforceable right or duty arising from section 2.

Currency note

This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What was the school M&O levy and why did it matter?

Idaho Code § 33-802(2) authorized school districts to levy a property tax of up to three-tenths of one percent (0.3%) of the market value of taxable property within the district to pay for maintenance and operation of schools. Together with the state general fund appropriation distributed through the educational support program in Idaho Code § 33-1002, the M&O levy was one of the two main pillars of school funding. The initiative would have shrunk that pillar by one-third per year over three years, and then removed it entirely.

Why did the AG warn the replacement funding was not guaranteed?

Because section 1 used "should" rather than "shall." Non-binding language directed at a future legislature has no legal force; the legislature can ignore it. Even if a legislature wanted to replace the lost revenue from sales tax, it would have to find the appropriations and the political will to do so. The opinion did not predict failure, but it did say the initiative did not guarantee replacement.

Why couldn't the initiative reach charter school districts?

Idaho has a few districts (most prominently Lewiston Independent School District and Boise Independent School District) created by special legislative charters dating to the territorial period. Bagley v. Gilbert and Howard held that those charters can only be amended by special legislative acts that specifically reference them. A general initiative does not satisfy that requirement, so the M&O levy phaseout would have left charter districts on their existing levy authority unless the legislature passed a separate special act bringing them in.

What was the school funding formula concern?

Idaho Code § 33-1002 contains a formula designed to equalize per-student spending across districts with different property tax bases: districts with high property wealth get less state aid, districts with low property wealth get more. The formula's logic assumes that property tax revenue is part of the funding mix. If the property tax piece disappears and is replaced by some other funding stream, the equalization formula may no longer make sense; the legislature would likely need to redesign the entire system. The opinion did not say the initiative was unconstitutional on this ground; it simply flagged the policy disruption.

What about section 2's reference to RS07175?

RS07175 was draft legislation referenced by the initiative as a recommendation to the legislature. The AG noted that the initiative did not actually enact RS07175; it only recommended that the legislature consider it. As a result, voters could not be said to have voted for the substance of RS07175 itself, since approval might have been driven by the operative section 1 levy phaseout rather than the section 2 recommendation. No court would enforce section 2 as creating any rights or duties.

Background and statutory framework

Idaho funds public schools from a mix of state and local sources. The state share comes through the educational support program in Idaho Code § 33-1002, distributed by formula to local districts. The local share comes mainly from the school maintenance-and-operation property tax levy authorized by Idaho Code § 33-802(2), which caps the levy at 0.3% of market value. Other authorized levies include a supplemental M&O levy, plant facilities levies, and bond levies, each with its own statutory cap.

The Idaho Income Tax Act and the Idaho Sales Tax Act are the two main contributors to the state general fund. Sales tax in particular is sometimes proposed as a replacement for property tax in school funding debates because it is broader-based and more visible to taxpayers, but it is also more sensitive to economic cycles, which is one of the policy tradeoffs the initiative did not address.

This certificate was one of three the AG's office issued on July 7, 1997, addressing different ballot initiatives. The other two dealt with state, county, municipal, and school district term-limits pledges and with state legislator term limits combined with lobbying restrictions.

Citations

• Idaho Code §§ 33-443A, 33-801B (proposed), 33-802, 33-1002, 34-1804, 34-1809, 50-478A
• Bagley v. Gilbert, 63 Idaho 494, 122 P.2d 227 (1942)
• Howard v. Independent School District No. 1, 17 Idaho 537, 106 P. 692 (1910)

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/C070797_a.pdf

Original opinion text

July 7, 1997
The Honorable Pete T. Cenarrusa
Secretary of State
HAND DELIVERED
Re: Certificate of Review Initiative Regarding Incremental Property Tax Relief

Dear Mr. Cenarrusa:

A proposed initiative petition was filed with your office on June 12, 1997. Pursuant to Idaho Code § 34-1809, this office has reviewed the petition and has prepared the following advisory comments.

MATTERS OF SUBSTANTIVE IMPORT

The proposed initiative has two sections that this certificate must address separately.

Section 1 would adopt a new Idaho Code § 33-801B. It would phase out the property tax levy for maintenance and operation of schools (the "School M & O Levy") over a period of three years.

By way of background, public schools in Idaho receive funding from a variety of sources. The two of interest to understanding the proposed initiative are the property tax levy for maintenance and operation of schools authorized by Idaho Code § 33-802(2) and the monies from the state general fund appropriated annually by the legislature. Idaho Code § 33-802(2) currently authorizes school districts to levy up to three-tenths of one percent (0.3%) of the market value for assessment purposes of the taxable property within the district. The annual public schools' appropriation of money from the state general fund is distributed to local school districts through the educational support program set out in Idaho Code § 33-1002. The largest source of revenue to the state general fund is money raised pursuant to the Idaho Income Tax Act and the Idaho Sales Tax Act.

Section 1 of the proposed initiative would require that the maximum School M & O Levy be two-tenths of one percent (0.2%) in 1999, one-tenth of one percent (0.1%) in 2000, and zero after that year. It also contains a nonbinding preference that the legislature "should" provide funding for the maintenance and operation of public schools from state sales tax revenues. Thus, although the proposed initiative, if enacted, would require reduction and eventual repeal of the School M & O Levy, it does not guarantee that the revenues lost to the districts would be replaced. Replacement would be dependent upon the legislature's ability and willingness to divert or increase (or both) general fund revenues to public schools.

We suggest adding in proposed Idaho Code § 33-801B a reference to Idaho Code § 33-802(2), the section that sets the maximum School M & O Levy. This will insure that the proposed initiative could not be construed as applying to any other levy, such as the supplemental maintenance and operation levy authorized in Idaho Code § 33-802(4).

We note that the proposed initiative cannot affect charter school districts. Amendments to the districts' individual charters must accomplish any mandated change affecting those districts. See Bagley v. Gilbert, 63 Idaho 494, 122 P.2d 227 (1942); Howard v. Independent School Dist. No. 1, 17 Idaho 537, 106 P. 692 (1910).

We also note that the proposal to eliminate the School M & O Levy may have an undetermined effect on the theoretical underpinning of the state's education support program set forth in Idaho Code § 33-1002. This program is also known as the school funding formula. In creating the school funding formula, the legislature recognized that a school district with high aggregate property values tends to be able to spend more money per student than a district with a lower property tax base. The school funding formula is designed to equalize the disparity in funding per student that otherwise might exist between districts. If the funds raised by the School M & O Levy are replaced with nonproperty tax funds, then, depending upon how the nonproperty tax funds are distributed to the districts, the rationale for the current school funding formula may no longer be valid. Because the proposed initiative does not mandate replacement funding, let alone discuss how it is to be distributed, predicting the effect on the rationale for the school funding formula is not possible.

Section 2 contains only a nonbinding recommendation. If adopted, Section 2 of the proposed initiative would have no legal effect. Its only effect is political, not legal. The political effect is that the voters adopting the proposed initiative may be presumed to have asked the legislature to consider adopting certain provisions of a specific legislative proposal, i.e., sections 2 through 9 of draft legislation identified as RS07175. This could be no more than a presumption, because it would be impossible to determine from election returns if the majority voting for the proposed initiative would have voted for section 2 alone or whether the coupling of section 2 with the operative provisions of section 1 resulted in its passage. In either case, section 2 creates no legally enforceable rights or duties. It is most unlikely that any party could prevail in a legal action alleging violation of section 2 of the proposed initiative.

CONCLUSION

Because the proposed initiative, if adopted, would not enact the provisions of RS07175, we have not undertaken an analysis of the substantive import of that draft legislation.

I HEREBY CERTIFY that the enclosed measure has been reviewed for form, style and matters of substantive import and that the recommendations set forth above have been communicated to petitioner Laird Maxwell by mailing him a copy of this certificate of review.

Sincerely,
ALAN G. LANCE
Attorney General

Analysis by:
TED SPANGLER
CARL OLSSON
Deputy Attorneys General