By John Stang

The “levy cliff” is a little known, but very real budget problem facing public schools in two years that often gets lost amid the discussion of the Washington Legislature deadlocking over funding a state Supreme Court ruling to increase the number of teachers in the state.

The levy cliff essentially translates to less tax money going to local schools starting in 2018.

What will happen to the Richland, Kennewick and Pasco school districts if the Legislature does not fix the levy cliff in its 2017 session? There will be noticeable belt tightening, but likely no major disruptions. Another question is how will it affect the Tri-Cities as a whole, especially the economy? That answer is hazy and probably won’t be known for a while.

Schools statewide likely will have to deal with the levy cliff issue in 2018.

Since 2013 when the Legislature split between a Republican-controlled Senate and a Democrat-controlled House, gridlock has ruled in Olympia.  Major issues take years to resolve.

The 2012 Supreme Court’s McCleary ruling — declaring teacher-student ratios in grades K-3 must dramatically improve — is far from resolved. So far, the Legislature has deadlocked on complying with the McCleary ruling with the GOP vigorously opposing Democratic attempts to increase taxes or close tax breaks to pay for the mandated improvements.

Possible solutions

By January 2017, the Legislature will have worked on the McCleary ruling for four years.

If the Legislature tackles the levy cliff, a grand bargain may ensue involving the McCleary funding and a related “levy swap.”

A “levy swap” is a likely partial solution to the McCleary funding impasse in which state property taxes for schools would increase in much of the state, and decrease elsewhere in an attempt to trim local property taxes for schools. The Legislature has discussed a “levy swap” for two years with no noticeable progress. The Legislature decided to punt on all these issues in its 60-day 2016 session, and the Legislature typically do not tackle taxes and controversial issues in election years for fear of backlash against incumbents.

Effect on Tri-City schools

Because of the Recession that began in 2008, the Legislature in 2011 temporarily increased the allowable amounts that local school districts can raise through local property taxes. Prior to 2011, most school districts’ levying authority was limited to 24 percent of what they received from federal and state sources. The 2011 legislation increased that to 28 percent. In 2018, that 28 percent automatically drops back to 24 percent, which is called the levy cliff.

In other words, Washington’s 295 school districts would lose an overall $260 million in local taxing capabilities —with roughly half having their current revenues being affected.

That could translate to a loss of $3.4 million out of a $203 million Pasco budget in 2018, speculated Howard Roberts, executive director of fiscal services for the Pasco School District.

In Kennewick, that would trim almost $2 million in the 2017-18 school year’s $206 million operating budget and possibly an extra $1 million in 2018-19, said Vic Roberts, the district’s director for business operations.

For Richland, that would trim about $1 million from a roughly $160 million budget under a “semi-optimistic scenario,” said Superintendent  Rick Schulte.

The cuts won’t cripple any of the districts, the three said, but the effects would be felt. None could speculate on where belt-tightening could take place.

Economic challenges

So does any of this affect the economy? That depends who you ask.

It also depends on what skills local employers are looking for and the average ages of the local work force, said Amy Anderson, who handles workforce and education issues for the Association of Washington Business.

An area with an older work force — meaning replacements will be needed sooner than a county with a younger work force — could see an effect in the numbers and quality of local students graduating from high school to be eventually become employed locally, she said.

Apples-to-apples figures comparing work force ages in Washington, Benton County and Franklin County were not available. However, slightly more than 21 percent of Franklin County’s work force is older than 55, while a third of its population is younger than 18, according to state and federal figures.

And roughly 57 percent of Benton County’s work force is younger than 25 or older than 55.

Liv Finne, who handles education for the Washington Policy Center, an economic think tank, argued that worries about the levy cliff and its effects are overblown. School districts have had years to prepare themselves and adjust their budget in anticipation of the possible loss of a small portion of revenue, she said. “This is not some earthquake that no one saw coming,” Finne said.

“This is just a big rhetorical game,” she said. “It’s all a big effort to strike loathing and fear into the hearts of the public.”