Cliff Buchan
News Editor

Most property tax payers in ISD 831 were not greeted with sticker shock this fall when they received their annual proposed tax statements from their home county.

But that may well change in the spring, a former member of the school board warned, when taxpayers will receive their actual notice of property taxes payable in 2007. Dick Tschida of Forest Lake told the board at its Dec. 5 Truth in Taxation hearing, the ìsticker shockî will be felt next year.

He was one of a half dozen district citizens to attend the hearing. He urged the school board to update its estimated amounts to not upset the public in the spring.

The reason? The passage of the five-year $6.5 million operating levy on Nov. 7 will result in a property tax increase on the school portion of a property tax bill.

Because the vote was taken after the notices were prepared by the counties, they did not show the impact of the levy renewal. And because the current levy was set to expire, the tax statements show no operating levy dollars as part of the proposed property tax bill.

That may look good now, Tschida said, but taxpayers may be unpleasantly surprised in the spring.

The levy plan

The district is planning a total levy of $14.4 million payable in 2007 for all funds. Thatís an increase of 9 percent or $1.185 million over the $13.21 million the district collected in 2006.

After the mandated hearing on Dec. 5, the board voted to approve the actual and final levy during a special meeting last Thursday.

The local property tax levy augments state and federal funding to cover the districtís $75 million budget in all fund areas. The general fund budget alone is $63.4 million.

The final levy includes dollars for the general fund, community education fund, debt service fund, food service fund and trust fund.

The general fund levy for voter approved referendum dollars jumps from $5.28 million in 2006 to $6.42 million, an increase of $1.14 million. That is because of voter approval of the levy renewal and expansion on Nov. 7.

By passing the levy on Nov. 7, voters approved a local tax increase that allows the district to increase its per pupil funding from $665 to $725 for each pupil unit.

Larry Martini, director of business affairs, said the 2007 levy is being recommended at its maximum amount to ensure the district will not lose corresponding matching aid from the state which would also decrease.

In two areas of note, the district will utilize a new levy for deferred maintenance and collect $421,372 in local property taxes for such projects.

But local tax dollars for health and safety items will go down next year. Because of state changes in approving health and safety projects and a smaller number of local projects, the health and safety levy drops from $1.42 million in 2006 to $480,000 in 2007.

More details

In his comments to the board, Tschida urged the district to inform the public about the changes that will be felt compared to the county notices. After computing a $1200 tax hike on his property taxes, Tschida concluded others would learn of increases later on.

He also questioned the formula adjustments from the state. He pointed out the district continues to lose equalization aid as the market valuation in the district increases. He questioned if the growth in new parcels and enrollment were keeping pace with the districtís budget growth.

Martini, in an interview later, said the facts pointed out by Tschida offered a win-lose position for the district. He said it is good to see the increase in market value because it improves the tax base, but it is not good to see a decline in the equalization aid paid by the state.

The new budget points that out, Martini said. The district received total equalization aid of $1.3 million in 2006 but will see that aid drop to $760,000 in 2007 due largely to the change in valuation.

While the legislature continues to make adjustments that allow districts to levy more local dollars to support districts, no formula adjustments have matched suit, Martini said.

Tschida blamed the situation in part to how the tax rate is established and a failure to make changes where needed.

He pointed to the city of Forest Lake as an example. He said the city was increasing its budget by 20 percent while recording market valuation gains of more than $3 million, thus resulting in a flat city tax rate.

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