Integrated planning helps district lower levy

by Jim Boyle

Only one person turned out to speak at the Elk River Area School District’s budget hearing, formerly known as the Truth in Taxation hearing.

And he came to compliment the Elk River Area School Board on its work keeping school taxes at bay.

The Elk River Area School District’s levy has dropped by nearly 3 percent since last year, and the school district won’t miss a beat in its effort to stay on top of its 10-year facilities maintenance plan.

This past year the school district infused $6 million into 20 maintenance and upkeep projects across the school district. This coming year it will renovate Parker Elementary School to the tune of $5.8 million.

Randy Anderson, the architect of the school district’s budget, credits integrated planning efforts with the ability to keep school taxes stable while still passing along decreases whenever possible.
“I think we’re doing our part,” Anderson told the Star News.

Anderson was not surprised to see someone from the commercial sector at the meeting.
Gary Santwire, representing Rivers Crossing and Equity Management, complimented the Elk River Area School Board on reducing its levy and encouraged them to spend even less in the future.

“I want you to be aware your operations depend on tax dollars, and our commercial tax payments in Elk River have reached a point where (the owners) are not going to be able to pay them,” Santwire said.

The Elk River Area School District has levied $38.5 million to be paid in 2012, which is down 2.9 percent from its $39.7 million levy last year.

Anderson said if the school district levied the same, local school taxes for residential homeowners would have gone up.

Santwire said despite the school district’s efforts to scale back its levy, some commercial property taxes have gone up 16 percent in some cases.

“You may not mathematically cause these increases, but you should be aware that a large component (of your constituency) is going to have to rebel or go broke,” he said of commercial property owners. “We won’t go quietly.”

Santwire said business leaders are going to have to assault market values on commercial property and shift burden off of them if they are to survive.

If they’re successful, Santwire said it may be residents standing at the podium next year.

Anderson says he understands Santwire’s frustration. The state’s latest budget fix hurts commercial business owners most. And those with the most expensive homes are also hit somewhat. The elimination of the homestead tax credit — initially instituted as a property tax break — has forced city, school district and county to spread their levies over a smaller pot of money.

The district’s net tax capacity has dropped from $74 million in 2008 to $62 million now.

The  state used to issue up to a $304 tax credit depending on the value of one’s home.

The maximum homestead credit was $304 for a property valued under $76,000. The amount of credit ascribed to the property went down as the price goes up. Homes with a value of $413,00 got zero credit.

It’s not the first time the state has shifted its burden onto local taxpayers, Anderson said. He can point out several changes that have been done.

The latest decision to abandon the homestead credit saved the state nearly $500 million, but has effectively shifted the burden to commercial and residential property taxpayers.

Anderson said he saw it coming and braced the district by refinancing some bonds that were sold after voters approved the $108 million bond referendum in 2000. There was only a couple that it refinanced, but the savings will total about $2 million.

Declining property tax values did help the district, as it garnered more debt equalization aid.
These two forces have nullified any impact taxpayers may have felt from a Parker Elementary School improvement project. The school district is exercising its right to make $5-plus-million worth of improvements to Parker school through an alterative facility levy.

Last year it levied $2.8 million for improvements and tapped other sources to complete 20 projects ranging from roofing and casework to upgrading floors, ceilings and walls.

Anderson budgets about $4 million (1 percent) annually to keep up with the school district’s $400 million worth of facilities. Integrated planning allows him the chance to meet the needs of the district all while avoiding the roller coaster effect when a levy drops significantly one year only to shoot way up the next year.

“That drives people crazy,” Anderson said. “They won’t remember a decrease.”

Alternative facility levies cover renovation projects but cannot be used to add additional brick and mortar. Those projects require voter-approved bond referendums.

This year the district will pay out more than $20 million to service its debt. Levies will also  provide nearly $18 million for the general fund.

Of that are three voter-approved operating levies that produce $698 per pupil unit or about $10.9 million between three separate levies. Each of those will eventually expire  — sometime between 2014 and 2021. These levies provide dollars for general operations, curriculum and technology.

The school district gets most of its revenue from the state. Nearly 70 percent of its $118 million in revenue for this coming school year will come from the state. Property taxes and other local revenue bring in another 17 percent.

The school district will get about 4 percent of its total revenue from federal sources.