School board votes to raise district's tax asking authority

It’s a case if you don’t use it, you’ll lose it.

“And you’ll never get it back,” Summerland Superintendent Kyle Finke said while discussing the board’s decision to raise the district’s tax asking authority by up to 7%.

The agenda action item is the result of the recent enactment of LB243, known as the School District Property Tax Limitation Act.

For the upcoming fiscal year, the act limits growth at 3%.

The act creates a default rule which caps the magnitude of a school district’s property tax request authority, which is based on three things: the previous year’s property tax request, the previous year’s non-property tax revenue and estimated non-property tax revenue for the current year. The sum of this year’s property tax request authority and non-property tax revenue can grow is set at a specific amount under the act.

By a super majority vote, the board of education can increase the base growth rate used to determine the school district’s property tax request authority, up to 7%.

The new limit does not depend on the levy limit, land valuations throughout the district or anticipated revenue from property taxes. Basically, it gives the board flexibility in amounts it can request at a later date.

“Students are valued at $1,500 per student right now. In three years, they’ll be valued at $900. That’s a 40% loss. That’s a large chunk of change that effects how your budget can grow,” Finke said.Finke stressed the district will not need to use 7% at the current time.

"But 3% makes it tough in the years going forward," he said.

District business manager Sally Finch compared it to past practices of approving a 1% increase to the districts property tax request authority.

"It was just a given. You did it every year. They gave you 2.5% and we always did the extra. It helps you keep the base up there. If you don't keep the ability to keep that there, you never get it back," Finch said.

Both Finke and Finch said the Nebraska Department of Education recommends schools visit the topic and vote to approve the increase.

Board member Nate Schwager asked if it will be a one-time vote.

That's the answer to a million dollar question, so to speak.

Finke said, "That's why my suggestion is we do this.

Board president Steven Thiele asked if the proposed resolution states the district will take advantage of the full 7% or if it gives the board the latitude to do that in September, during tax hearings.

Finke said it gives the board the authority.

"We don't need the 7%," Finke said.

"It's giving us authority to build that into the budget," Finch said.

Schwager said he cannot imagine a scenario where the district would need to use the proposed increase.

"It doesn't go into expenditures, it goes into the revenue side," Finch added.

The board unanimously approved the resolution.