Avoid school sticker shock

On May 16, voters in local school districts will go to the polls and decide whether to approve local school budgets. Recently, some Greater Johnstown School District residents have expressed some “sticker shock” over the $450,000 price tag for a new bathroom-equipped concession stand at Knox Field, one part of the $39.6 million capital project plan voters approved overwhelmingly in 2014.

We feel this incident is instructive of how complex the school budget and the capital project process has become, and how voters need to be continually educated about some of the finer points of how the public approves funding for its local schools.

New York state has a property tax cap for its public school districts and local governments. The tax cap aims to limit the growth in local taxes for public schools to 2 percent annually, or the rate of inflation, whichever is lower. This cap has been a good thing for controlling the rate at which taxes increase, but it’s still very confusing to most voters.

That tax cap only applies to the percentage increase of a school’s local property tax levy, not its tax rate. The property tax levy is the total amount of property taxes extracted from the public in a given year to help fund a school district.

The property tax rate is the amount of money paid by taxpayers per thousand dollars of assessed property value for their home or business.

Property tax rates are affected by local equalization rates. The equalization rate is New York state’s formula for leveling the difference between what local property is assessed for and what properties are actually selling for within a municipality.

School districts typically encompass several municipalities, which means school tax rates aren’t usually available until the summer when New York state releases new municipal equalization rates.

For the 2017-18 school year, New York state has set the base property tax levy cap at 1.26 percent, but every school district, based on a myriad of factors, is assigned a “maximum allowed levy” number, which includes various exemptions to what is allowed by the tax cap.

One of the big exemptions for local property tax caps is debt service payments for capital projects. Although this irritates and confuses the public, it is necessary to exempt debt service payments from the tax cap because it ensures bond holders they will be repaid, which helps maintain low interest rates for school district debt.

Many school districts this year, like Johnstown or Mayfield, have debt payments that are exempted from the tax caps.

For the average school district voter, the key number they are asked to evaluate is not spending increases, or tax rates, but the increase to the tax levy, minus exempted spending.

We’ve noticed some school districts aren’t presenting the total tax levy in the news releases and brochures they put on their district websites, but instead focus on the percentage increase without the total tax levy figure. The local property tax levy is often the biggest dollar amount, besides state aid, in most school budgets, and could be accused of leading to “sticker shock” for some voters.

We encourage local school officials and school district voters to look past the shock and rationally evaluate school spending.

By Patricia Older

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