A TAXING ISSUE: CONFUSION OVER TAX LEVY LEAVES VOTERS WITH QUESTIONS ABOUT BONDS

School districts can't increase tax rates without a vote of the people, right?

Wrong.

Well, actually, that's incorrect.

Many people incorrectly assume that personal property taxes collected as revenue for school districts are only adjusted by popular vote or when the value of real estate and personal property is increased after a reassessment.

Voters are asked for approval when school districts want to take on additional debt to finance buildings or other projects. This debt is generally covered by a debt service fund, which is paid for with money from property tax revenue.

However, few voters realize school boards are required to hold a public tax-rate hearing before Sept. 1 of each year for the purpose of setting a tax levy. School officials must follow a strict formula when deciding the amount of tax levy that is needed to maintain levels of revenue.

Those levies are dependent upon the amount of revenue collected the previous year, anticipated revenue for the coming year and shifts in enrollment and the consumer price index. The tax rate levied may be lower than the rate computed using a standardized formula, as long as adequate funds are available to service debt requirements.

If the amount of anticipated revenue changes or enrollment decreases, school boards may increase tax rates to meet cost-of-living increases as measured by the index. Board members are also allowed to increase taxes as needed to maintain previous levels of revenue, regardless of whether voters attend the tax rate hearings.

Such was the case when the Cape Girardeau Board of Education voted last month to increase its tax levy by 3 cents.

People living in the school district will be taxed $3.41 per $100 assessed valuation this year. Dr. Steve Del Vecchio, the district's business manager, said the increase was needed to offset a decrease in revenue from state-assessed utility payments and lower overall assessed valuation.

The district will receive less money from the state in utilities revenue because it is projecting a decrease in enrollment, while most other districts in the county are growing, he said. Other districts will be able to maintain tax rates from the previous year because the increased utilities revenue falls below the 1.4 percent allowable cost-of-living increase.

Despite the increase, Cape Girardeau taxpayers shouldn't see any difference in their overall tax payments, because the local increase will balance a similar decrease in state-assessed utilities taxes, said Del Vecchio.

"The control point for the voter is the state saying 'We're not going to allow you any more revenue than the consumer price index,'" he said. "That's the only amount it can increase."

The Jackson Board of Education voted not to change its tax levy this year, although that decision will mean the school district will have to use some reserve balances to cover costs not covered by that fund. The tax levy has remained unchanged since about 1993.

People living in the Jackson district will again be taxed $3.21 per $100 assessed valuation. School officials project that continued growth in enrollment and assessed valuation will prevent the district from having to dip into fund balances after this year.

"We told voters when the bond issue was passed we would try to keep the debt service levy at 46 cents," said Gibbons. "We think we can absorb those dips into the balances for one more year before we start to see some turn-around."

Del Vecchio said criteria for all school finance issues are confusing, but numerous checks and balances are in place to ensure equity in taxation. School officials meet each year to compare enrollment figures, and financial information regarding property tax revenue is maintained by the county clerk. In addition, school board members must vote to approve changes in tax rates in a timely manner, and county and state officials watch for improprieties, he said.

People should keep in mind that levels of spending and growth within districts are the main factors for determining tax rates, said Del Vecchio. Voter-approved tax-rate changes affect funding for special projects, but the final decisions regarding school tax levies are made by school board members within state guidelines.

Said Del Vecchio: "Voters are looking at things in terms of the tax rate, when really the total revenue the district is allowed is the important figure."