South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

As Lindbergh Schools begins budget-reduction process, officials talk tax hike

Survey would be conducted before putting hike on ballot

As roughly 80 participants in Lindbergh Schools’ budget-reduction process have started their work to trim expenditures by more than $3.9 million, district officials are weighing the possibility of seeking a tax-rate increase.

District officials pledged in late 2008 not to seek a tax-rate increase for at least 24 months because of the financial difficulty residents and businesses are experiencing as a result of the current recession. Though Lindbergh also has been experiencing fiscal woes, its reserves of roughly $24.6 million are the reason why the situation is not a crisis at this point.

But a greater-than-anticipated decline in the district’s assessed valuation has derailed Lindbergh’s long-range financial plan that calls for a spend down of those reserves with a deficit-spending cap of $3 million per year.

As a result, Superintendent Jim Simpson recently told members of the district’s eight budget-reduction committees that Lindbergh voters could consider a tax-rate increase as soon as November.

Noting the amount of the district’s reserves of $24.6 million is “dropping quickly,” he said, “… It’s going to continue to drop. And we’ll talk about a tax levy through all of this. Yes, we’re going for a tax levy. We need one as soon as possible. That might be as early as November this year, but I can tell you that running tax levies in recessionary times is a difficult thing. It’s not a sure thing.

“Also, how much you ask for is a key component. I call it knocking on the door and whether the door slams in your face or not. Because if you ask for the wrong number and it’s too high, then you get too many doors that slam in your face and you don’t get the levy. Somebody will say I’ll give you $150 more a year, but I won’t give you $500 more a year. It’s that kind of thing …,” Simpson added.

Chief Financial Officer Pat Lanane said a budget-reduction target of $3,914,526 has been established. That amount includes an increase in employee health insurance premiums, mandated increases in two employee retirement programs — the Public School Retirement System and the Public Education Employee Retirement System — and a possible employee salary hike.

The chairs and co-chairs of the eight committees will comprise a general task force that will provide oversight in making final recommendations to the school board. As proposed, the committees will complete their work in about one month when the general task force will convene with the goal of providing final recommendations to the school board in early March.

In June, the school board adopted a 2009-2010 operating budget that projected a deficit of $3 million. But a further decline in the assessed value of commercial real estate — including successful appeals by commercial property owners to the county Board of Equalization — increased the district’s projected budget deficit for the current school year to roughly $5.1 million, according to a revised budget adopted in December.

Officials plan to further utilize district reserves to cover the increased deficit, and projections indicate those reserves will drop to roughly $19.5 million at the end of the current school year. If reserves fall below roughly $13 million, the district would have to borrow money to operate.

And Lanane told committee members Jan. 14 that even if they are successful in reaching the target of $3.9 million in reductions, the district still faces an annual $3 million budget shortfall — the amount being funded by reserves.

“… We are looking ahead. We’re looking ahead at when the next tax election can occur. It’s got to happen,” he said. “People have asked me: Sounds like you’re preparing for a tax increase, they say with kind of a tension in their voice. And it’s like: Yes, we are. We really, really need it. But we also know this isn’t the time to ask for it …

“And other people have said: When are you going to ask for it? We will ask for it when things get a little better. And the first time that we do a community survey and talk to the people in our district and it comes back and it says: We’re ready to vote ‘yes’ — that’s when we’ll do it. I hope it’s next year. We could make it beyond next year if we stick to our financial plan if we have to.

“That’s the good news. But we have to get back to that financial plan of $3 million, not $5 million. And that’s exactly what’s happened this year. We knew early on when this (data) was prepared back in July, we thought it was going to be $4 million. And that was because property values just declined dramatically …,” Lanane said.

Regarding the use of reserves to balance the budget, he said, “… So as we look at it, this $3 million deficit at some point in time we have to get that made up because here is a law in the state of Missouri. We cannot have deficit financing. You cannot as a governmental entity run a deficit. Now they give you one break on that. The deficit means your expenditures are more than your revenue. You get one little break on that. You get to count your balances, your reserves, as part of your revenue, which is great because that’s what’s going to bail us out of this for a year or two or three. But once that’s gone — we don’t have those balances — we have to get back to zero.

“So in the end, this $3 million has to go away. We have to get that covered. We’re not covering that in this process we’re talking about tonight. When we get done with this process, we’ll still have a $3 million gap. That’s what we’ll need — 23 cents — in tax increase to close. That just gets you back to zero. It doesn’t give you one more penny to spend. So obviously when you go for that tax increase, you’re going to want to ask for something more. I don’t know.

“Maybe it’s about double that. Maybe it’s around 45 cents. At 45 cents, it gives you a plus $3 million over what we have to spend. That doesn’t take you very far … We’ll test the number. When we do the survey, we also test the number …,” he said.

A 45-cent tax-rate increase would cost the the owner of a $200,000 home an additional $170 per year.

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