October 03, 2012 - A 2012 residential tax rate roughly 11.7 cents less than the current rate was approved last week by the Lindbergh Board of Education.
The Board of Education voted 6-0 Sept. 25 to establish the district's 2012 tax rates. Board Treasurer Kara Gotsch was absent.
The district's approved 2012 tax rates are:
• Residential — $3.4595 per $100 of assessed valuation, a decrease of 11.74 cents from the current rate of $3.5769.
• Agricultural — $5.7261, an increase of 92.83 cents from the current rate of $4.7978.
• Commercial — $3.9450, an increase of 5.44 cents from the current rate of $3.8906.
• Personal property — $3.9096, unchanged from the current rate.
The district's 2012 debt-service tax rate will increase by 1 cent, to 49.5 cents from the current rate of 48.5 cents.
Lindbergh's "blended" 2012 tax rate, which is not levied, but used for state calculations, is $4.1215 per $100, roughly 5.2 cents less than the current "blended" rate of $4.1738.
No residents spoke during a public hearing on the proposed 2012 tax rates. During the hearing, Chief Financial Officer Charles Triplett outlined how the proposed tax rates would result in Lindbergh collecting $498,524 less in local tax revenue in 2013 compared to 2012.
"… We spent a great deal of time talking with the state auditor's office … trying to understand why we would have any type of reduction of revenue this year," he said. "Our initial understanding was that under (the) Hancock Amendment, there shouldn't be any revenue reduction. We should be allowed to adjust our rates to generate the same amount of revenue this year as we had last year, at a minimum.
"The answer, in short, is that there is an 'unintended consequence' — and that's a quote from the auditor's office," Triplett said, noting state legislation approved last year allowed taxing entities to apply tax-rate increases approved by voters after 2008 to the previous year's assessed valuation.
Lindbergh voters approved Proposition L, a 65-cent, tax-rate hike in November 2010. When the tax-rate increase first was levied in September 2011, the district was able to use its 2010 assessed valuation and a 1.5-percent Consumer Price Index increase to that assessed valuation.
As a result, Lindbergh collected nearly $620,000 in additional revenue using the state auditor's "Form B" under the new legislation that overrides calculations in that office's standard "Form A," which is based on the Hancock Amendment's funding provisions.
This year, Lindbergh is required to use Form A, and, as a result, the district cannot use the CPI increase, Triplett said, which accounts for the loss of nearly $500,000 in revenue.
The "unintended consequence" of the new legislation is based on the unforeseen circumstances of multiple years of declining assessed valuation, according to Triplett. 2012 marked the fifth straight year Lindbergh's assessed valuation, excluding new construction, has declined — this year by 0.21 percent.
"The auditor's office also stated that Lindbergh's situation is the first time they have seen the combination of these factors result in decreased total revenue from the previous year," Triplett wrote in a memo to Superintendent Jim Simpson and the Board of Education.
The chief financial officer outlined some potential options for the board to consider in an effort to recoup the $500,000 in revenue.
"… One of the options we could do is to raise taxes above the Form A calculations. We could go above those ceilings," he said. "Now the state auditor was, again, very clear that they will not certify any rate above that."
If the district's tax rate was not certified, Lindbergh would be listed in the state auditor's list of entities with non-certified tax rates.
"It's not a list that we would want to be on, obviously. The state auditor also is required to refer us to the state attorney general's office as having non-certified tax rates, and the attorney general could take action …," Triplett said.
"Now, our district auditors said they would have to issue a finding of non-compliance during the next audit for next year. We haven't had any of those in decades and we certainly don't want one now," he continued. "And district residents could file suit against us in court for having a tax rate that's not been certified by the state auditor.
"And it also, I think, would have a negative effect in our community in the perception and good will that we have with the public. We risk that, and I think it would harm that if we do not have a certified tax rate …"
Another option, Triplett said, would be to file suit to challenge the state auditor's calculations in court, but that would be a lengthy and costly process with no guarantee of a satisfactory outcome.
But he said the loss of revenue would be a one-time occurrence.
"… The silver lining here is that we do think it's only a one-year reduction to the district," Triplett said. "And there's a couple of reasons for that. One is in 2013, this coming calendar year, is a reassessment year. If we will see even just over a 1 percent increase in assessed valuation, we'd get the $500,000 back in revenue. So if we have any uptick in property values, then we would recapture that $500,000."
The loss of revenue also could be offset by a projected increase in sales-tax revenues, smaller withholdings from the state and a potential increase in state transportation reimbursement, he said.
"… Strangely enough, if all those figures hold for what we see now, we would generate about $500,000 in new revenue this year …," Triplett said.
After listening to the options Triplett presented, Board of Education President Vic Lenz said his personal opinion was the district should accept the state auditor's tax-rate calculations.
"… I wouldn't want to personally see the district get into any of those other situations, and an 11-cent decrease in taxes per $100 for our homeowners is a plus for the community … I think that's where we are," he said.