The Lindbergh Board of Education will ask voters in the Nov. 3 election to approve a waiver of the state’s Proposition C sales-tax rollback.
Proposition C is a 1-cent statewide sales tax dedicated to education funding. Half of the revenue collected is divided among the state’s public school districts and the other half is returned to taxpayers in the form of a property-tax rollback unless district voters have approved a waiver of that rollback.
However, because Lindbergh’s current operational tax rate is the state-required minimum of $2.75 per $100 of assessed valuation, voter approval of the Proposition C rollback waiver would not have any financial impact at this time, according to Chief Financial Officer Pat Lanane.
The Board of Education voted unanimously last week to place the Proposition C rollback waiver on the Nov. 3 ballot.
Board members also voted unanimously Aug. 18 to set the school district’s 2009-2010 blended tax rate at $3.1488 per $100 of assessed valuation.
The 2009-2010 blended tax rate includes an operational tax rate of $2.7688 — 0.0001 cents more than last year’s rate of $2.7687 per $100 — while the district’s debt-service tax rate remained unchanged at 38 cents per $100.
The approved blended operational tax rate of $2.7688 is a combination of four tax rates — residential, $2.75; commercial, $2.75; agricultural, $4.0020; and personal property, $2.8964.
No residents spoke during a public hearing on the proposed tax rate at which Lanane outlined how a historic decrease in Lindbergh’s assessed valuation would negatively impact the district’s revenues for the 2009-2010 school year. While the majority of local taxing districts can roll up their tax rate through the Hancock Amendment to regain lost property-tax revenue, Lindbergh cannot roll up its operating tax rate because it’s set at $2.75 per $100 of assessed valuation — the state minimum.
“… The most damaging part of this whole process has been the fall in property values,” Lanane said. “And for a district such as Lindbergh, who is what I call a minimum tax district, we set our tax rate per Amendment 2 — $2.75, which the state has envisioned in their Constitution in Amendment 2 as the lowest tax rate you could have as a school district even though the formula actually assumes a much higher rate than that. It’s in the $3.40s. So (it’s a) very low tax rate.
“Because we had a fall — 9-percent average reduction in property values, people in Lindbergh will pay less property tax. Other districts are having this same meeting through-out St. Louis County and they’re talking about rolling up their tax rate to recover that loss. Because we set it again at $2.75 per Amendment 2, we do not have that option. So while I’m sure for many people in this recession they’re glad to know there’s a little tax relief in terms of their property tax, they may not be quite as happy about the loss of value of their property. So it’s really a dual-edged sword,” he said.
Noting the net property-tax loss to the school district will total $1,865,174, Lanane said, “If we were to put that in a commodity — a school commodity — and we’re not saying we’re going to do this, but if we were to say: Well, what does that equal? What would it take to get $1,865,174? It would take 37 teachers’ salaries to equal that. So it’s a real loss and it is going to follow us into the next year, this loss will, because this is a reassessment year and it stays with us for all of next year. So when you look at the public notice — and nothing’s really changed from the public notice — you will see that the percentage — I know I’ve never this before in the 16 years, now 17th year, I’ve been looking at this for the district — percentage of new revenue from reassessment negative 5.08 percent.
“While again, I’m sure some people look forward to a lower tax bill, and that will happen in Lindbergh. It is pretty devastating for the school district since we are on what’s called a hold-harmless status with the state, which means basically our state aid is frozen. We’re not going to receive any additional state aid. We get only a relatively small portion of our total budget from the state …”
Cognizant of the financial difficulty residents and businesses are experiencing as a result of the current recession, district officials pledged last November not to seek a tax-rate increase for at least 24 months. However, they have discussed on several occasions their desire to ask voters to approve a waiver of the Prop C sales-tax rollback.
Lanane said, “… This is something we’ve talked about a great deal in our workshops, occasionally at board meetings, and basically what we’ll be asking the public is to grant a waiver to Prop C, which is a 1-percent sales tax for education — understanding that 1-percent sales tax for education was going to be used two ways. Half goes to the district to spend. Half is for property-tax reduction. It was never meant and cannot apply to districts who set their tax rate, as I mentioned to you earlier, according to Amendment 2. So it’s never been applied in this school district. We simply keep that rate right at that $2.75, which is kind of a minimum tax rate for school districts.
“… Until it goes above that, it would never have any effect whatsoever,” he continued. “So, again, understanding that this only applies to the operational tax rate above $2.75, Lindbergh has never been above $2.75 since the change in rates back in the ’80s … We’ve never had one since the time Prop C has been effect and basically we’ve always kept the entire 1 percent. Again, because we are below that $2.75 threshold.
“So it has no effect on our taxpayers. Not one taxpayer will pay one penny more in taxes with the waiver than they are without it. It really has no effect in Lindbergh. However, there is an effect in terms of our communications and what you as a Board of Education will be able to ask the public to do in the future … This year, in all those calculations you can find this, our Prop C rollback was 14.8 cents.
“That means that in the future, should you ask for a tax increase above $2.75, you’ll have to ask for whatever you really need, plus another 14.8 cents. So it’s really, I don’t want to say dishonest, but it’s certainly misleading to the public. You’d be going to ask for a much larger increase that you’re never going to be able to levy and you’re never going to see the benefit from … And so I think to go and ask the public for a larger increase than you really know you’ll get or want, is certainly misleading and probably not what anyone would want to do in terms of communicating with our public.
“For instance, if we thought we needed to raise an extra 15 cents, our levy by 15 cents, in order to get that impact, you’d have to add another 15 cents — 30 cents — to get the impact of 15. Well, I don’t know anyone that I’ve talked to thinks that’s a very good idea,” Lanane said. “And again, we’re not asking for anything. It doesn’t bring one more cent into the school district. It doesn’t lower anybody’s tax rate. It doesn’t raise anybody’s tax rate. It’s neutral …”