School Board OKs nearly12% tax hike – Duluth News Tribune, Wednesday, December 18, 2013

School Board OKs nearly12% tax hike

   The Duluth school district’s share of property taxes will increase by nearly 12 percent for the second consecutive year.

   The School Board voted 6-1 to increase taxes by 11.9 percent after its truth in taxation hearing Tuesday. Member Art Johnston voted against the measure. The increase comes from the need to help make yearly Red Plan debt payments and the approval of the second operating levy question Nov. 5. The total amount for both brings what the owner of a $150,000 home will pay in 2014 to an extra $61.55 a year. Last year, the district received $28.9 million from taxpayers. The approved increase brings that amount to $32.3 million.

   The district uses money from the sales of former schools and other properties to help pay Red Plan debt. Sales haven’t happened as quickly as predicted, with roughly $16 million in property still unsold. That has meant money from the fund balance has been used to make yearly transfers, at a total of $11 million, said Bill Hanson, business services director for the district. With the fund balance down to $1.9 million , the board chose to increase taxes at the maximum level allowed by the state instead of further eating into the remaining balance and taxing to a lesser degree.

   Last week, the district’s independent auditor, Wipfli, advised the board to begin rebuilding its fund reserve. The district has a policy to keep it at 10 percent of its expenditures, which hover around $98 million.

   If the board didn’t raise taxes, it may have led the district into statutory operating debt. That happens when operating debt is more than 2.5 percent of the most recent fiscal year’s general fund expenditures.

   A smaller expenditure budget was created for next year pending approval of the tax increase, Hanson said.

   Because the transfer of $4.9 million from the general fund to pay debt wasn’t made Tuesday because of the tax vote, he said, that amount will be moved to the fund balance, which will be expected to sit at $6.5 million in June.

   The move is meant to begin rebuilding reserves, Hanson said.    A few residents spoke out against the tax increase. John Stromgren said his Social Security payments won’t cover the increase.

   “How can you justify putting that kind of burden on the community?” he asked.

   Marcia Stromgren said the district’s test scores should be better for what residents paid for the new schools.

   “Do better in the future, so that those of us who have to pay the bill feel we are getting our money’s worth,” she said.

   The three outgoing board members —Mary Cameron, Ann Wasson and Tom Kasper — were honored at the meeting. They served 16, 10 and four years, respectively. Superintendent Bill Gronseth said their service improved school culture and student achievement.

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