District's goodwill worth more than tax hike

In such a difficult year for investors and the economy in general, governments at all levels have learned how voters feel about asking for higher taxes.

That's why the Cape Girardeau Board of Education is wisely reconsidering a plan to raise school taxes by 6 cents for each $100 of assessed valuation. The board will make a final decision on the tax rate at its meeting Monday.

The district is in a tight financial spot. But it's not as tight as last year, when a few thousand dollars less in district reserves would have triggered a state takeover of its finances. This year, the district has a healthy $2.7 million -- 9 percent of the annual budget -- in reserves.

If needed, the district can use some of these reserves to get through a year when revenue will be less than anticipated because of stagnant assessed valuation.

The trouble began when the district based its budget on an expected 3 percent growth in assessed valuation. In recent years, the district's assessed valuation has steadily grown by 5 percent or more from year to year. Because of economic conditions, the district prudently lowered its expectations to 3 percent growth this year.

Instead of growing 3 percent, however, personal property and real estate valuations grew by only about a tenth of a percent. That left the district $510,000 short of anticipated revenue.

The 6-cent levy increase would have made up about $256,000 of that amount. That's money that would be spent for new textbooks, athletic equipment and roof repairs.

In terms of taxes, a 6-cent increase is a small amount of additional burden for most homeowners. It would add $11.40 onto the next tax bill for a $100,000 home.

But timing and perception are major concerns.

First, district patrons have seen their savings and retirement plans gutted by the national economic downturn.

They aren't ready to give up another nickel right now, as illustrated by the overwhelming defeat of proposed sales and fuel tax increases for transportation on the August primary ballot.

Second, taxpayers in the district were left with the impression last year, during the campaign for the narrowly approved 58-cent school levy increase, that the district would not be asking for any additional taxes for a few years.

A quarter of a million dollars -- the amount the 6-cent increase would generate -- is a lot of money to most families. But it's not worth the loss of goodwill the district has built up in recent years.

And things could change for the better in the school district as quickly as they did for the worse. A mild winter, for example, could produce utility savings that would offset much of the revenue crunch.

The district needs to send a clear message, however. If the economy doesn't improve over the next year and if the growth in revenue continues to be far less than anticipated, then it would have to look at either a tax increase or spending cuts.