From the Superintendent's Desk...
Every January and February, we are introduced to legislative proposals that will be debated in the State’s Unicameral to address the state’s most pressing issues. A recurrent theme over the last several years during legislative debate has been the state’s property tax issue. Without a doubt, our state has a system of taxation that is entirely over reliant on the use of property tax to fund public education. There is no point in debating this topic. It is a matter of fact. So, it is not surprising that we are seeing bills introduced for debate and consideration that attempt to address this pressing and important issue.
Last year, I advised you of four key points to please keep in mind and to use as you evaluate the quality and intent of the legislative bills being introduced for debate in the Unicameral, when this same issue was taken up by our legislature. In summary, those four points were:
1. If proposed legislation doesn’t address generating additional tax revenue for the state to redistribute to school districts through the state aid formula, it likely won't have any real impact on the property tax issue. School districts can levy less taxes when they receive more state aid.
2. Legislation proposing “spending limits” or “budgeting limits” are likely to have little impact on property tax requests by school districts. Most proposed “spending limit bills” do little to reduce out of control spending, because school spending is not out of control.
3. Proposed legislation to limit the taxable value of land seems to makes sense, but in many school districts such limitations of taxable value may simply cause an increase in the levy rate and make no real difference in the actual amount of taxes requested by a school district. The levy rate will simply be increased to generate the same amount of tax revenue.
4. Legislation that supports putting more money into reimbursement for special education services offered by schools districts is a strong idea. That additional money given back to school districts across the state for providing the special education services they are required to provide would equitably help all school districts across the state.
Governor Ricketts indicated in the January 5th edition of the “Omaha World Herald” that his plan for shoring up the state’s $900 million budgetary shortfall would not mean cuts for K-12 education or current special education funding levels. Such reassurances will have little, positive impact on Ravenna Public Schools, as Ravenna Public Schools is a “non-equalized” school district that receives no equalization aid through the state aid formula. Additionally, if the special education funding level provided by the state is only maintained at its current level and not increased for the future budget cycle, special education costs will still increase and represent and increased tax responsibility for the patrons of Ravenna Public Schools.
The Governor has also proposed an alternate method for assessing agricultural land values. The method he proposes would change the method to value agricultural property from market value to an “income based approach.” As with previously introduced legislation to slow the aggregate value of agricultural land from year to year, such limitations or adjustments to taxable land value may simply cause an increase in the levy rate and make no real difference in the actual amount of taxes requested by a school district. The levy rate will simply be adjusted upward to generate the same amount of tax revenue, unless additional state aid is provided to school districts to meet operating costs.
There are also three other bills that have been introduced by Senator Erdman and Senator Groene that attempt to address the property tax issue by addressing the way school district’s generate their budgets and corresponding tax requests. LB 431 seeks to cap cash reserves at 50% of the total amount received from personal and real property taxed; LB 432 seeks to strip tax asking entities of their ability to request delinquent taxes as part of their tax request; and LB 479 seeks to create a separate budget hearing meeting that must be held 30 days in advance of the meeting at which the budget is adopted and provides that meeting can NOT be held on the same day as any other “regularly scheduled meeting” of the governing body.
LB 431 would have little impact on Ravenna Public Schools. Under state statute, the school is allowed to have a necessary cash reserve up to 45% of its total General Fund Budget of Disbursements & Transfers. The 2016-17 Budget for Ravenna Public Schools budgets 17.4% of our Total General Fund Budget of Disbursements & Transfers for cash reserves. Best practices is to have a minimum of 3 months (25%) of a school district's operating budget in cash reserves. If passed, this bill would have little impact on the school district’s spending or the ability for the school district to develop a budget that promotes continuation of its current programming and staffing.
LB 432 would have little impact on Ravenna Public Schools, as we currently do not utilize a request for delinquent taxes as part of our property tax request. Additionally, statewide, less than 5% of property taxes are delinquent. If passed, this bill would have little impact on the school district’s spending or the ability for the school district to develop a budget that promotes continuation of its current programming and staffing.
LB 479 would require the school district to have a separate budget hearing to review the proposed budget for the upcoming year in detail, in advance of its required adoption by the school board at a separate meeting. Over the past two years, Ravenna Public Schools has held a "Budget Workshop & Planning Session," including the whole board where all budget funds are reviewed in-depth by the school board, including the line item budget for the General Fund. This meeting is publicly advertised and members of the public are welcome to attend and to provide comment. Members of the public are also welcome to request copies of the budget materials, with the understanding that those materials are "draft" copies at the time the workshop is held, as the workshop is a formative process provided to board members to offer input to the superintendent on the design of the budget. If passed, this bill would not impose any substantial changes to the budget process for Ravenna Public Schools, as they currently engage in a process that embodies the spirit of this proposed legislation.
The ideas proposed by Governor Ricketts, Senator Erdman, and Senator Groene seem to make sense and seem to provide the opportunity for tax relief to the patrons of Ravenna Public Schools. However, when you evaluate their proposals’ abilities to provide tax relief against the four guiding points from above, it quickly becomes apparent that their proposals may not offer property tax relief.
To the Governor’s credit, he has taken a step in the right direction by requiring Amazon to begin collecting and remitting state sales tax on internet sales. It is estimated that this will generate and additional $11.2 million dollars in tax revenue for the state. Generating addition revenue sources for the State of Nebraska through tapping previously unused or underutilized revenue sources, such as the collection of internet sales taxes by Amazon, will help the state improve its cash position and enhancing its ability to more adequately fund K-12 public education and special education, which could help alleviate the tax burned placed on property owners.
As this legislative session unfolds and bills are introduced and debated, I strongly encourage you to please use the four guiding points above to evaluate the quality and potential merit of proposed legislation in respect to its ability to positively impact the tax climate in our school district and across the state. If you ever have any questions or want to discuss any proposed legislation’s potential impact on the Ravenna Public School District, I would be happy to speak with you.