Tax increase strategy is to pare down debt
Nobody likes hearing that their taxes might go up, even slightly.
This tax season, a number of people — myself included — saw an increase in the amount that they owed to the Internal Revenue Service or a decrease in their refund. So, it’s easy to be sympathetic when people complain about not wanting to pay more in taxes.
That being said, Butler School District administrators announced a proposal during a school board meeting on Monday that could help the district to avoid debt.
Superintendent Brian White proposed an increase of 3.03 mills to the district’s current 101 mill property tax rate. A mill of tax generates $1 in revenue for each $1,000 of a property’s assessed value.
For example, if the assessed value of a person’s home was $20,000, they’d pay an extra $60 in taxes. If the home was assessed at $30,000, they’d pay an additional $90. And so on.
Nick Morelli, director of business services for the district, argued that doing so would generate $1.2 million for the district that could go toward pay-rate increases, health care costs, counseling and curriculum needs and cash reserves.
Currently, Morelli said, the district has been operating without such reserves. That situation has caused financial distress in recent years, and current board members attribute a majority of the district’s financial problems to an ongoing lack of savings.
The increase is projected to create a $150,000 reserve in the general fund.
“Are we going to start saving for what’s coming next, or are we going to wait and borrow?” White asked the meeting’s attendees. “When you wait and borrow, you have interest.” He has a point. White noted that the district currently has more than $131 million in outstanding debt, and more than $45 million of that amount is interest.
Additionally, an assessment by a maintenance consultant company projected that the district would need to spend $38 million in capital projects over the next 10 years.
Board members at Monday’s meeting said that while they have previously opposed tax increases, the long-term savings of the proposal might outweigh the negative elements.
We understand that any type of tax hike could be difficult for many people. But while the increase might be painful, it could also be necessary for the district to get its budget in order. Carrying less debt is fiscally sound, and it’s preferable that the district not take out as many loans.
Most people would agree that raising taxes is never desirable. However, there are some community needs that can make the case for doing so. Funding our local schools and helping them to minimize the amount of debt they’re carrying is one of those needs.
While the district should continue to explore other options for school funding, this is one of the few examples where a tax increase could be justified.
— NCD
