In a year when more than 100 schools districts asked residents to approve higher levy amounts via referenda, the South Washington County School Board has been able to slightly reduce its levy from last year.
The final levy amount the school board is recommending for the 2012-13 is proposed at $53.4 million a 0.5 percent decrease from last year’s levy.
The school board proposed the property-tax levy amount at about $146,000 higher at its Oct. 27 meeting, but has since been able to pare down that amount due to the issuance of refunding bonds and a fund surplus.
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“We’re able to levy less this year because we’re carrying over some funds,” Superintendent Mark Porter said at the Dec. 1 meeting.
The school board is set to approve the final levy at its Dec. 15 meeting.
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Exclusion leading to higher taxes
Though this year’s proposed property-tax levy is a decrease from last year’s, taxpayers in District 833 might not see an overall decrease in their taxes because of the state Legislature’s decision to repeal the Market Value Homestead Credit program and replace it with a Market Value Homestead Exclusion.
The homestead credit provided property-tax relief on homeowners’ primary residences, while the state reimbursed that amount to cities to make up the difference in their levies, according to the League of Minnesota Cities.
Under the exclusion program, homes and businesses will be taxed based on their respective market values.
Homes valued at $76,000 or less are eligible for the maximum exclusion, which means 40 percent of the value of those homes will be exempt from taxation under the new program. Homes over $413,000 are not eligible for the exclusion.
The exclusion percentage lessens the closer a home value gets to $413,000.
By eliminating the credit, the state was able to save roughly $260 million each year, according to the Minnesota state tax website. It was one cost-saving measure the state used to close the $5 billion two-year state budget deficit.
As a result of the exclusion, the tax base for school districts, cities and counties shrinks, which, in many cases, is leading to higher property taxes in the commercial/industrial sector in more rural communities, and many homeowners will see a rise in overall property taxes.
“Impact will vary widely across the state, but the overall impact of the shift is it increases property taxes for almost all those involved,” South Washington County Schools Finance Director Aaron Bushberger said.
In District 833, the exclusion is reducing the tax base by 4.73 percent, according Bushberger, which is nearly identical to the state average for school districts.
‘Not keeping up with inflation’
During the meeting, Bushberger said that, on paper, this year’s property-tax levy might look good, but the district will have to do some creative budgeting in upcoming years because the amount of money the state is allotting to school districts isn’t keeping up with the rate of inflation.
“The current funding we receive is about $314 per student,” he said. “That number has not kept up with inflation.”
He added: “Since that number has not kept up with inflation, that gives school districts two options: no. 1, reduce expenditures. The other is to increase their operating revenue through referenda.”
