How do you decide whether to raise property taxes or not?
Please take time to come to our Board Meeting next Tuesday, June 18, 2013. We will be approving the annual budget for 2013-14, which is more than a Half Billion Dollars: $500,000,000!!!
The budget can be found here.
Budget Hearing and Property Tax Rate Increase
The meeting is at 6pm at the District Office (575N 100E, American Fork). The required budget hearing (which is an open forum for all budget-related comments) begins shortly thereafter, maybe around 6:15 or 6:30pm. In my previous two years, I have not seen anyone speak during the formal budget hearing. I have been told that this is consistent over the past decade. I will give my opinion, of course, but it will mean more coming from you.
Part of the budget will be a property tax-rate increase. A Truth in Taxation hearing will occur on August 6, but, if you want to have an impact, you need to speak up PRIOR to the budget being adopted--that means June 18. (Don't complain to me; complain to the legislature. This is how they've set it up.) The fiscal year starts on July 1. So, a full month of expenses will have occurred prior to the Truth in Taxation hearing in August. The reasons for the tax-rate increase are: 'to raise an additional $1.5 million to provide additional "pay as you go" resources, allow less future debt and recover the charter school offset.' I'll go into each of these reasons in a moment. The estimated cost on a $250,000 home will be in the range of $12-$15/year. Business or rental property will be almost double that amount.
The study session begins at 4pm. We will discuss the Common Core trainings that occurred last week with approximately 2000 employees attending. We will also get an overview of the budget.
The formal Board Meeting/Budget Hearing will begin around 6pm. It will also include: a) Approval of Association Contracts for Teachers (Certified), Classified (e.g. Nurses, Bus Drivers, Secretaries, Custodians, etc), and Administrators, b) Approval of Trustlands Plans, c) Four additional Board Policies, d) Property Purchase, e) 2015 Calendar.
Pay As You Go
The Board has indicated a desire to get out of the bonding cycle and begin using existing funds to purchase and maintain property, etc. Our last bond was for $210 million for projects over five years. Our principal and interest payments are about $45 million/year. So, if we were able to stop bonding, we could hold on to that $45 million and use it to pay for the bonded expenses, and still have about $15 million left over after the five years. This is a great idea, and the less indebtedness that we can incur, the better, in my opinion. However, I am unsure that levying a property tax increase to garner an additional $1.5 million is the best option.
Allow Less Future Debt
This is really the same thing as Pay As You Go. If you spend more cash and less on credit, then you reduce your debt later on.
Charter School Offset
Essentially, when charter schools were created, all funding came through income tax. Several years ago, the law was changed to allow for an additional "offset" for charter schools, based on property tax amounts in each district. (See below for the math*.)
When the law was first passed, it amounted to less than $500,000. Now it's about $1.4 million. As we increase property taxes and as charter school enrollment increases, that "offset" amount increases. Most school districts increased their tax rates right after the law went into affect. However, since Alpine was looking at bonding, it was decided the timing wasn't right. Essentially, the legislature didn't want to raise income taxes, so they left it to the local districts to raise property taxes to help pay for the additional amounts going to charter schools.
So, the question is whether or not you want your property taxes increased. And if not, why not? If so, why?
What Else is in the Budget?
Some other things you may be interested in. The following were included in the budget prior to any discussion of a tax-rate increase.
- Additional 10 teachers (FTE's) to help reduce class size. This is in addition to those teachers being hired due to approximately 2500 additional students coming to ASD in the fall.
- 1% permanent salary increase for teachers and staff: ASD has a salary schedule that pays you based on years of service and education level. This is referred to as "Step and Lane".
- One-time 1% bonus for employees to be paid in November.
- $25,000 for membership in the BYU-Public School Partnership
- Dues and fees paid for association membership for the School Board, Administrators, Accountants, and other 'specialty' fields. Association fees are not being paid by taxpayers for teachers.
- An increase of $1000 for board salaries, from $215,335 to $224,788 for the Superintendent and, from $174,526 to $189,998 for the Business Administrator.
It's just $13.48 per year for the Board's proposed property tax increase. It's just $7.11 per year the legislature has increased property taxes. It's just $24.00 this year and a total of $36.00 per year next year for the bond. It's just more for the Vineyard RDA from 2011.
Every taxing entity justifies its tax increases with those words: "It's just". Do I think ASD will be able to put the $1.4M to good use? I do. However, that really shouldn't be the question before us. The questions every elected official should grapple with are:
"Is this the BEST use of that money?"
"Is a tax increase the only way we can fulfill our obligation to the public?"
As many a wise person has said before me, "The power to tax is the power to destroy." What we see (the good that ASD can do with the money) must be balanced against what we don't see (families struggling to stay in their homes, decreased revenues due to increased tax rates). Property taxes are especially eggregious because property doesn't generate income unless you sell it. Your home value is dependent on everyone else who is selling around you. But you will not see a dime of that supposed increased value until you sell. So, unlike income taxes, where the taxation is actually based on money you are earning, property tax is based on money other people are earning on their homes. It is entirely possible to price people out of their homes with property taxes.
Another justification is the "fairness" of what we spend on ASD students vs. what the charter schools spend on theirs. According to the Utah Taxpayers' Association, ASD receives the least amount per student of every district or charter school in Utah. So, in order to be fair, this amount is being levied so we can bring our revenue up to that of the charters in our area. The problem with that is, we are "balancing" this fairness out on the backs of our taxpayers. If we don't like the way the legislation is written, we need to take it up with the Legislature, not use our power to tax to create "equality". I, personally, look on our status as the lowest funded as a badge of honor. Our students do well. We have great teachers. We are trying to do well by our teachers and staff. And yet, we are trying to keep costs down. Why must we seek to "Keep up with the Joneses?"
It is the job of our district administration to make recommendations to the Board. It is the job of the Board to properly balance those recommendations with the burden it will place on our taxpayers and our obligation to educate the students in our district properly. It is a very difficult task, and a solemn one, at that. One, I do not take lightly.
While I can see the benefit of having an additional $1.5 million to make repairs and to save for the future, I am not convinced that our community and our students will be better served by that money being transferred from you to the district. It is a balancing act. And I am choosing to wait for a greater need.
It's just your money, and we shouldn't take it except as a last resort.
*[Here's the charter school offset math: If you take all the local property tax ASD receives and divide it by the total number of all district and charter school students, that is the property tax per student amount. Then you take the number of charter school students multiplied by that per student amount and then divide by 4 (25%). That is the amount that ASD doesn't get from the state in income tax funds. Property Taxes / (charter + district students) * charter students*25% = amount ASD doesn't get from the state, but that the state sends to the charter schools in our area.]