State auditor declines to certify Mehlville School District’s 2009-2010 tax rate, Noble says

Noble says county will levy tax rate approved by board

By MIKE ANTHONY

Missouri Auditor Susan Montee’s Office has declined to certify the Mehlville School District’s 2009-2010 tax rate, according to Superintendent Terry Noble.

The Board of Education voted in August to increase its “blended” tax rate by roughly 15 cents for the 2009-2010 school year. The “blended” rate — a combination of the residential, agricultural, commercial and personal property tax rates — will increase to $3.4326 per $100 of assessed valuation in 2009-2010 from $3.2804 per $100 in 2008-2009.

Under the Hancock Amendment, the district can roll up its tax rate to regain lost property-tax revenue. But while the combined, “blended” rate will increase, residents actually will see only an increase in their residential property rate for 2009-2010.

While the State Auditor’s Office has declined to certify the district’s tax rate, it will not refer the matter to the Missouri Attorney General’s Office for possible injunctive relief, Noble said. Furthermore, he said the county collector of revenue will levy the tax rate approved by the Board of Education.

Mehlville voters in November 2008 approved Proposition T, which transferred roughly 31 cents per $100 of assessed valuation from the district’s debt-service fund to the operating fund. The measure is designed to generate roughly $5.6 million annually for the operating fund. Proposition T did not increase Mehlville’s overall tax rate, but extended the district’s bonded indebtedness by 15 years — to 2029.

The certification issue with the State Auditor’s Office arose from Proposition T and involves tax-rate calculations unique to St. Louis and Jackson counties. Beginning in 2003, taxing entities in those two counties were required to calculate separate tax rates for residential, agricultural, commercial and personal property.

“Before we did that, we had what was called just a single-rate calculation, just one rate …,” Noble explained, noting that when the law changed to require the four separate rates, “to protect taxing entities, they wanted you to be able to calculate the four single tax rates that you’re going to set — match it to the revenue that it would bring in — do that calculation and then turn around and reconcile that with the old single-rate calculation. And the purpose for that was not because that would be the official one, but only that that would protect school districts. They wanted to make sure there wasn’t some reason why a taxing entity would actually lose money by using the four categories.

“So they said: OK, do your four category calculations. Then turn around and do it the old way in the single-rate calculation. Then when you do that, if the single-rate calculation should be higher, then you’re allowed to raise the four individual rates so that you don’t lose money — so that your single-rate calculation really protects you …,” he said.

The certification issue stems from Proposition T’s ballot language, Noble said.

State statute allows a taxing entity to place a proposition on the ballot that either establishes a new tax-rate ceiling or requests a specific amount of an increase to the tax-rate ceiling. Because the goal of Proposition T was to not increase the district’s overall tax rate, the ballot language established specific amounts of the residential property, commercial property, agricultural property and personal property tax-rate ceilings instead of seeking a 31-cent increase to the ceilings.

“… We didn’t just want to ask for a 31-cent increase in our levy because chances are, it wouldn’t come out to exactly 31 cents and we wanted to make sure we kept our promise to the people because the whole plan was that overall the whole tax rate of the district would be the same,” Noble said.

To make that work, the district’s bond counsel recommended not seeking a 31-cent-increase in the tax-rate ceiling, but establishing the new tax-rate ceilings.

“… If we just put 31 cents on there and then it turned out we didn’t reduce our debt-service levy by 31 cents, we only reduced it by 29 (cents), then we would have increased our tax rate by two cents and we didn’t want to do that,” Noble said.

Compounding the problem, he said, was state law required the board to vote in Au-gust 2008 to place Prop T on the November 2008 ballot — before officials received the district’s final 2008 assessed valuation figures from the county.

As a result, the calculations for the ballot language were computed with the district’s 2007 assessed valuation figures.

Because the ballot language was based on the district’s 2007 tax-rate ceilings and not the 2008 tax-rate ceilings, the single-rate calculation won’t reconcile with the four separate rates and the State Auditor’s Office will not certify the district’s tax rate, the superintendent said.

“So because of that (using 2007 assessed valuation figures), there was just pennies or fraction of pennies’ difference in what the 2007 ceilings were and what the 2008 ceilings were going to be,” he said. “But just because they’re a fraction off, it won’t reconcile with the state auditor’s calculation form.

“It would not reconcile the single-rate calculation with the four separate ones. I mean it’s just fractions of pennies off, but it’s not the same. Because it’s not the same or higher, then they wouldn’t certify it …”

Though the State Auditor’s Office will not certify Mehlville’s 2009-2010 tax rate, Noble said he was pleased the auditor will not refer the issue to the Attorney General’s Office for possible injunctive relief.

Mehlville officials are working with the district’s bond counsel, the State Auditor’s Office and local legislators to draft a legislative solution to the issue.

“With their help, there will be what I call a legislative fix proposed and bill prefiled in December …,” Noble said. “What we were told was they were going to go ahead and ask the attorney general for an opinion, but knowing that we were going to be seeking corrective legislation that they probably wouldn’t do that …

“We’ve got a verbal agreement that they agree with us and they’re not doing it (seeking an opinion from the attorney general) formally because — I don’t know why they won’t do it formally except that they realize that the glitch is with the law …”

This is Mehlville’s second go-round with the auditor’s office regarding its 2009-2010 tax rate, according to Noble.

When Mehlville officials began working last spring through the calculation form provided by the Missouri Auditor’s Office to determine the district’s estimated tax rate for 2009-2010, they learned the calculation form would not allow the district’s tax rate to be rolled up to account for a decrease in assessed valuation as permitted under the Hancock Amendment.

As a result of that calculation, the district faced the potential loss of roughly $2.3 million annually in operating revenue.

But that issue ultimately was resolved in the school district’s favor in late April when Mehlville officials received a favorable formal opinion from the Missouri Auditor’s Office that also was supported by a favorable informal opinion from the Attorney General’s Office.