Annandale School District held its annual truth-in-taxation hearing Wednesday, Dec. 4, at the Annandale Middle School. Minnesota’s truth-in-taxation law requires school districts, cities and counties to provide a truth-in-taxation public hearing before adopting a tax levy for the following year.
The Annandale School Board will be approving the levy for taxes payable in 2014 at the Thursday, Dec. 19, school board meeting.
The truth-in-taxation hearings are meant to enhance public participation in Minnesota’s property tax system. The hearings include a presentation about the current budget and proposed tax levies.
The process was enacted by the 1988 Minnesota Legislature and was phased in from 1989 to 1993. Full implementation of the process began with taxes payable in 1993, the same year as the repeal of the general property tax levy limitations for counties and cities.
The school district’s hearing was opened by Superintendent Steve Niklaus and business manager Rick Pullen. School board members Jeanette Rieger-Borer, Katie Jones, Mike Holthaus, Paul Zabinski, Jon Scheer and Alicia Millner were present in the audience. As was the case in 2012, only one citizen was in audience, former school board member and chair, Mike Schmidt.
Levy down $271,576
The total proposed school district levy, payable in 2014, is $4,643,094 a decrease of $271,576. The school district levy in 2013 was $4,914,617. This represents a decrease of 5.5 percent.
"We are recommending to the board that the district levy the maximum amount allowed by the legislature," Niklaus said. "The 5.5-percent levy reduction is levying at the max."
There are two kinds of levies, Niklaus explained – those that are spread on market value and those that are spread on net tax capacity.
Levies that are based on net tax capacity total $3,360,703 for taxes payable in 2014. This compares to the levy of $3,439,923 payable in 2013, a decrease of $79,220.
These levies include payment on the bond issue for Annandale Elementary School, operating capital, community services, health and safety and other miscellaneous items.
"All parcels of property in the district are subject to these levies," Niklaus stated.
Market value
School district levies based on market value will total $1,282,391 for taxes payable in 2014. These include the renewal of the operating levy approved by voters in November of this year.
Seasonal property (lake cabins) plus agricultural land and buildings are exempt from these levies based on market value
Presently, a person owning a lake cabin does, as part of their property taxes, help (at the same tax rate as homesteaded property) pay for the construction of the new elementary school. But they do not, as part of their property taxes, help pay for the operating levy approved by the voters in November.
Seasonal property owners have since 2001 been required to pay an additional tax to the state called the state general levy. It is a property tax that does not benefit the schools or any other local government body. The money collected from this tax goes directly into the state’s general fund.
Reduced levies
The following levies were reduced for 2013-14:
■ The levy for operating capital, money used for buying equipment and repairing facilities, is down by $82,460. This is because part of this funding is based on the average age of the district’s buildings. When the new elementary school was built, it lowered the average age of the buildings.
■ A levy designed to improve educational opportunities and outcomes designed to close the achievement gap was reduced by $11,968, going from $51,300 last year to $39,332 in 2013-14. The legislature changed the formula, which resulted in decreased funding.
■ The voter-approved operating levy is reduced by $198,046 for 2013-14. The decrease is a shift in revenue from levy to state aid, something the legislature did to help less property-rich districts.
■ The prior year adjustments levy was reduced by $55,896, because 2012-13 included funds for the removal of asbestos in the tile at Bendix.
Increased levies
The following school district levies increased for 2013-14:
■ The health and safety levy increased by $16,473, going from $55,310 to $71,783. This levy is for state-approved capital projects related to safety and health. Projects in 2013-14 include adding a fall protection device in a ventilation access at Annandale Middle School. It also is the estimated cost for the removal of more asbestos at Annandale Middle School.
■ The career and technical levy was increased by $12,940, going from $38,027 to $50,967. This levy goes for state-approved career and technical classes. The levy increased due to legislation that adjusted the formula.
■ Student achievement, a new levy, increased the local levy by $49,019. Approved by the legislature, this levy is meant to improve educational opportunities and to close any academic achievement gaps.
Confusing statements
In November, school district property owners received estimates of their property taxes due this May. In most cases, the estimated taxes are too low.
The fact that the operational levy renewal was approved by voters on Nov. 5 is not reflected on these statements.
While most property tax payers will see a reduction from what was paid in 2013, it will be more than the amount shown on the estimates mailed out by the county.
The statements property owners receive in April will reflect an accurate amount owed.
2013-14 budget
Niklaus presented and explained the 2013-14 revenue and expenditure budget. At this time, the district is projecting a general fund deficit of $241,657 for the year we are currently in.
"The deficit will be covered by the district’s fund balance," Niklaus said.
The general fund balance is projected to be almost $3.4 million when the year ends June 30, 2014.
"This budget will be updated in January and expenditures will increase," Niklaus said. "We anticipate having signed teacher and custodian contracts by the January board meeting."