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April 25, 2013

Tax cap is deceiving

As if figuring out one’s tax bill isn’t mind boggling enough. In its second year of implantation, the 2 percent limit on property tax increases makes things all that more complicated. One cannot just assume his or her individual taxes will not increase more than the cap threshold. 

It is not a simple calculation. In fact, the tax cap will affect each school district’s levy in various ways. The process uses a much more complex formula, eight steps, as a matter of fact.

The formula is used to figure out what is called a tax levy limit. For example, the formula allows for certain expenses to be exempt from the cap, therefore allowing the total tax levy increase to be greater than the “perceived” cap. There are also other factors such as assessments and equalization rates that will still impact tax rates.

A property tax report card is still required and will now include the district tax limit and a proposed tax levy before exemptions. The budget notice should now include the district tax levy limit, a proposed tax levy before exemptions and a budget statement.

School boards do have options. They can propose a budget requiring a total tax levy at or below the calculated maximum allowable tax levy prescribed by law (requires a simple majority 50 plus one voter approval) or propose a budget requiring a total tax levy above the maximum allowable by law (requires 60 percent voter approval and a statement on the ballot indicating the required tax levy before exemptions exceeds the tax levy limit).

If the budget is not approved by the public, the district may resubmit the original or revised budget plan to voters on the third Tuesday in June or adopt a contingency budget that levies a tax no greater than that of the prior year. If the resubmitted/revised budget proposal is not approved, the board must adopt a budget that levies a tax no greater than that of the prior year and it would be subject to contingent budget requirements.

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