The Oregon Constitution restricts the state’s authority to issue bonds or otherwise incur indebtedness. Oregon voters have approved 16 exceptions to this restriction, 14 of which are still in effect. The exceptions allow the state to issue bonds for a variety of purposes, including for home ownership loans to veterans, reforestation of state lands, construction of buildings for state universities and community colleges, housing for the elderly and disabled, pollution controls and seismic rehabilitation of public buildings. However, the restriction in the Constitution still prevents the state from issuing bonds or otherwise incurring indebtedness to assist local school districts in financing K-12 capital costs. The Constitution also limits the bonding authority of local taxing districts, including school districts.
This measure would revise the Oregon Constitution to allow the state to issue general obligation bonds to match voter approved bonds for K-12 school capital costs. The measure would accomplish this by adding two different provisions to the Constitution. The first new provision would allow local taxing districts to incur bonded indebtedness on or after January 1, 2011, to finance capital costs. Capital costs are defined to include the costs of land and other assets associated with acquisition, construction, improvement, remodeling, maintenance and repair. Capital costs do not include operating costs.
The second new provision would allow the state to issue general obligation bonds to provide funds to be granted or loaned to school districts to finance the capital costs of the school districts. The proceeds from the bonds could be used only to provide matching funds to finance the capital costs of school districts that have received voter approval to issue local government bonds. The state bonds may not be used to pay school district operating costs. Bonds issued by the state could not be repaid through property taxes.
This new constitutional provision also creates a “school capital matching fund” to pay for matching funds to school districts to finance capital costs and debt service on state bonds issued pursuant to this measure and repeals the current “school capital matching subaccount” in the “education stability fund.” Any existing funds in the school capital matching subaccount would be transferred to the new school capital matching fund, and that fund also would receive 15 percent of net lottery proceeds.
Under the measure, if residents of a local taxing district vote to approve bonds for school capital costs, the local taxing district would be eligible to receive matching funds from the state. This would allow the state to help pay for K-12 capital costs. The result would substantially reduce the costs to the local school district and its taxpayers to make capital improvements, such as constructing, repairing or maintaining school buildings.
(This impartial statement explaining the measure was provided by the Legislative Assembly of the 2009 Regular Session.)