Milton board looks at smaller tax hike
In August, district residents approved a preliminary budget that included a 10 percent levy increase. But a drop in enrollment reduced the amount the district can legally levy, and a drop in district property value pressured the district to drop the levy even more.
At a special meeting Tuesday, Superintendent Bernie Nikolay recommended the board “underlevy,” or cut its budget, by $500,000. The money would come from the fund balance, which are funds normally set aside for unexpected expenses such as repairs or new technology.
The proposed lower levy is $12.75 million, up from $12.16 million last year.
The board agreed with Nikolay’s suggestion and, in a straw poll, directed the business manager to present a plan for approval when the board meets Monday, Nikolay said after the meeting.
Business Manager Dianne Meyer presented scenarios to the board that ranged from a $250,000 budget cut to a $1.3 million cut. The $1.3 million cut would have kept the tax rate increase at zero, but Meyer didn’t believe it was possible, she said in an e-mail to the Gazette.
The district already cut $1.2 million when preparing the preliminary budget, mostly by cutting contingency fees. That budget, with the 10 percent levy increase, passed 22-20 at an annual meeting of district residents.
Normally, districts recommend school boards tax to the state-imposed limit because they could lose state aid in future years if they don’t.
But these are extraordinary times, Nikolay said. District property value dropped 2.5 percent this year, the first drop in decades. Last year, property value increased by 8.11 percent.
And, taking money from the fund balance to fill the budget gap avoids a loss of state aid next year, Nikolay said.
Using fund balance could hurt the district’s bond rating, which could mean higher costs when borrowing money for capital projects, and it could mean more short-term borrowing in the future, Nikolay said.
“The board saw that as less of a drawback than less state aid in future years,” Nikolay said.
If the board taxed as much as it was able, the tax rate—the amount property owners pay per $1,000 of property value—would increase by 11.84 percent. Instead, it will increase by 7.62 percent if the board votes for the plan Monday, Nikolay said.
The mil rate numbers are based on equalized values. Taxes are based on assessed values in each municipality and were not immediately available, so actual tax rates could vary.