Tax Cap Law the Focus of Presentation
A new state law that caps increases in property tax levies could require more than $1.5 million in future spending cuts in the Huntington School District, according to a recent in-depth presentation by district executives.
Superintendent James W. Polansky and Assistant Superintendent David H. Grackin utilized a PowerPoint presentation to explain the intricacies of the tax cap law and how maximum allowable tax levy increases are required to be calculated. Officials also outlined the current financial condition of the Huntington School District and the amount of monies held in various reserve funds.
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The presentation was made during the Huntington School Board's Dec. 5 meeting in the Jack Abrams School auditorium. Mr. Polansky explained the difference between the tax levy (amount of dollars collected from taxpayers) and the tax rate (the individual dollar rate per $100 of assessed valuation used to calculate tax bills).
The new tax cap law provides for the following:
• School districts may not adopt a budget that requires a tax levy exceeding the previous year's levy by more than two percent plus exclusions or one percent plus the rate of inflation plus exclusions, whichever is less.
• The rate of inflation is determined by the average increase in the monthly consumer price index for the 12-month period ending six months prior to the start of the fiscal year.
• For the fiscal year beginning July 1, 2012, the CPI period ends December 31, 2011. The pertinent figure will be released on January 19, 2012. The current figure is in the range of 3.5 percent.
Mr. Polansky took trustees and residents attending the meeting through the eight step calculation that must be used to determine the maximum allowable increase in the tax levy. Items such as payments in lieu of taxes (PILOTs), legal judgments, excessive increases in the contribution rates of the state pension systems and tax base growth are all factored into the calculation.
Going step-by-step through a calculation worksheet flashed up on a large screen, Mr. Polansky said the current estimate indicates the Huntington School District could increase its tax levy by a maximum amount of 2.41 percent for the 2012/13 fiscal year with approval by a simple voter majority.
"Please note that this presentation and worksheet demonstrate the allowable 2012-2013 tax levy limit calculation based on the requirements and exclusions permitted by the state," Mr. Polansky said. "The initial estimate indicates an allowable $2.3 million increase in the tax levy from this year to next with a simple majority vote. Certain figures are yet to be released by the state that may change this estimate."
School districts are forbidden to increase their tax levy by more than the state cap unless a super majority of 60 percent of voting residents approve. The tax cap means the Huntington School District will be challenged to improve student performance levels while working with increasingly fewer financial resources, Mr. Polansky said.
Mr. Grackin highlighted various fiscal issues facing the district and explained the seven reserve funds the district maintains. The funds hold a combined total of $16,031,301, the largest of which is the capital reserve fund in which rests $5,309,967. The reserve funds consist of surplus monies from the general school budget that have been specifically set aside over the years.
Capital reserve fund monies can only be expended with voter approval. The existence of the fund has allowed the district to complete a variety of projects without needing to sell bonds and assume debt.
"It is important to note that there will be numerous discussions between now and April to determine Huntington's 2012/13 budget strategy - a strategy that will address both fiscal and educational concerns," Mr. Polansky said.