Corporate tax cuts may shift burden to homes, small biz
The Carbon School District Board of Education did not adopt a budget for the 2014-15 school year during a regular meeting on Tuesday night because they need to hear what the public says about the possibility of adding a judgment levy to their taxation process. The reason for such a levy? To make up a shortfall in tax revenues because of companies' tax appeals being upheld by the state.
Last year the district had to return $259,000 to Union Pacific Railroad because of such an appeal. That kind of a hit in revenue has often been absorbed by the district when it happened in the past. But things are different now.
"We have had a number of these in the last couple of years with the Union Pacific Railroad one being the largest single award," said Darin Lancaster, the district's business administrator, after the meeting. "We took it and made up for it in other ways in the past, but with this one we just can't absorb it any more."
Consequently Lancaster proposed that the district adopt a budget with a judgment levy in it so that the loss could be made up for by assessing all property tax payers in the county more to make up for the shortfall.
"In other words everyone else in the county would have to pay for the money that Union Pacific got back?" asked board member Kristen Taylor.
Lancaster said that would be what would happen. He said that if such a levy were put in place a $130,000 home property tax would go up $9.60 this next year. He noted that the average business in the county would see a raise of $17.45 for the year. He also pointed out that any of the businesses that had been successful in their appeals would also be subject to the judgment levy's higher rate.
This would not be the first time the school district has enacted such a levy. However the last time it was done was nearly a decade ago, in 2005.
The near $14.5 million budget that Lancaster proposed to the district for the next school year includes amounts of money that the district negotiated with the Carbon County Education Association representatives on June 4. That money includes a 1 percent raise for teachers and a 1.4 percent raise for other school district personnel. While the teachers get a lower percentage increase compared to other employees money will be added to the steps for teachers with 21 and 28 years of time with the district. The 182 day contract for teachers also includes paying a retirement rate increase of 1.73 percent and an increase in health insurance premiums of 5.9 percent.
While the CCEA has not ratified the agreement, district officials felt that the negotiations went well and that it will soon be approved by the association's general membership.
"We caught a real break on insurance premiums this year as compared to the last few years," said Lancaster. "We bid it out and Educators Mutual came in with the 5.9 percent rate. The yearly increases have been in the double digits in the last few years."
He pointed out that the retirement increases have come due every year since the recession began in 2008.
"Because the state retirement system took such a big hit in 2008, they implemented planned increases to make up for the losses for a number of years," said Lancaster. "Those increases were totally planned and this is the last year that the increases are to be put in place."
Lancaster said that that the district has done well financially despite the pressures from both loss of revenue and higher costs because it has become more efficient. He said that a number of retirements and loss of positions has helped. One of the things he pointed out was that the number of teachers needed for next year will be lower because of the way the district is structuring the change over from a junior high system to a middle school model. This fall ninth graders in the district will be attending Carbon High School and sixth graders will be going to the two district middle schools.
Returning to the judgment levy, Lancaster said that the returned revenues and then the consequent lower tax assessments on those same properties is hurting the district's financial stability.
"Because of those paybacks and the decreases we have been depleting our reserves," he told the board. "Four years ago I would have said we should just eat these judgments. But now I think we need to realistically look at this. Our reserves right now are only $600,000. Each month the district costs $1.5 million to operate."
All board members were concerned about the increase in property tax on the average taxpayer in the county. And because it is an extra levy the district has to have a Truth in Taxation hearing on the increase as well. They voted to reject the proposed budget and hold such a meeting in August, to decide if they should put the judgment levy in place.
Lancaster pointed out to them that they must have a budget in place by August 15. The regular board meeting for August is scheduled for August 13 so the board decided the Truth in Taxation meeting could be held that same evening.
Taylor also brought up the fact that the appeals by the businesses had not only affected the school district but other government entities that receive property tax revenue as well.
"Does that mean they are going to be using a judgment levies as well?" she asked.
Lancaster said he didn't know about what the other agencies affected would do.
Board member Jeff Richens pointed out the school district was "the gorilla in the room" on this issue because they get the largest percentage of the property tax payments and that the other entities would have much less effect on any tax increases should they decide to do the same thing.