ST. GEORGE – The Washington County School District is proposing a 3 percent tax increase to help cover the cost of inflation, a move the Utah Taxpayers Association is opposing. A public hearing on the matter is set for Aug. 11.
If enacted, it will result in the second bump in Washington County property taxes for school district purposes in two years, in addition to a voter-approved $185 million construction bond passed in 2013.
The district is falling significantly behind, Superintendent Larry Bergeson said, because inflation is eating away at the district’s buying power.
“You periodically have to adjust this for inflationary type of things, because the costs just get too extreme,” Bergeson said, “especially on the tight budgets that we have here in Utah in education, with the low per-pupil expenditures.”
Inflation of 2 to 3 percent per year adds up quickly, Bergeson said; in just five years the district can lose up to 15 percent of its buying power. That is especially hard in Utah, with school district budgets already stretched thin and expenditures already lower than the rest of the country.
“We are dead last again, for almost 30 years now, in per-pupil expenditures,” Bergeson said. “When compared with all other states, Utah is dead last.”
However, the Utah Taxpayers Association, a nonprofit watchdog group, is opposing the district’s tax hike.
“We don’t think they should be doing this, this year, again,” association president Sen. Howard Stephenson, R-Draper, said. “We’re hoping that they will not increase this tax, and that they won’t do it annually.”
Rather than raising taxes a little every year, Stephenson said, the association recommends the district hold off until there are significant needs and then propose a more substantial tax increase. Identifying specific needs for a tax increase can generate more community support, Stephenson said.
“When the district decides to make a significant tax hike, it will be like the boy who cried ‘wolf’ and nobody will pay attention because they increase it slightly every year,” Stephenson said.
Every 5 to ten years, it’s appropriate to make adjustments for inflation, Stephenson said. “But don’t do it every year, because it makes a mockery of the Truth-in-Taxation process.”
Washington County School District Business Administrator Brent Bills said the district needs the increase; during and after the recession, the school district went six years without a tax increase and still has not caught up, in spite of last year’s 6 percent tax hike.
“As the cost of things go up, and the dollar actually devalues every year, we lose real spending dollars off of that,” Bills said. “If we don’t ever adjust the property tax dollars for inflation, we just keep falling further and further behind and we don’t have the money to stay at the status quo.”
The board is not entirely in agreement, however. School board member Craig Seegmiller will be voting against the proposed tax increase, even though he believes there are strong arguments on both sides of the issue.
During his 14 years on the school board, Seegmiller said he has never voted for a tax increase.
“I know there’s inflation, I know that there are financial realities, and I know that teachers also deserve raises, and so there’s compelling arguments,” Seegmiller said, “but I just feel so strongly about raising taxes on taxpayers.”
This year’s proposed tax increase
The proposed tax increase is approximately 3 percent of the district’s current $33.17 million in annual revenue from property taxes, Bills said.
The proposal equals a 1.6 percent increase in the certified tax rate, Washington County Clerk/Auditor Kim Hafen said.
If enacted, the increase would net the district $1 million, and raise property taxes on a residence valued at the average of $231,379 by $11.45 each year. Businesses valued at the same amount would see an increase of $20.83, Hafen said. Primary residences are assessed at only 55 percent of their appraised value, while businesses and second homes are assessed at 100 percent of value.
A residence worth $500,000 would pay an additional $24.75 each year, Hafen said, and a $1 million home would see an increase of $49.50.
In setting tax rates, the district tries to balance both the desires of the taxpayers, and the Utah Legislature, which encourages districts to do their share for school funding by collecting an adequate amount of property taxes, Bills said.
The school district board is working under the assumption that it will pass the tax increase, Bills said, although a public hearing has not yet been held and a final budget not yet approved for the fiscal year that started July 1.
After the public hearing, the board could decide to lower the tax increase or do away with it altogether, Bills said. The district has a rainy day fund and other ways of absorbing the expected revenue if needed.
“So it’s not like it’s over and done,” Bills said.
“It’s just the timing of when things have to occur,” Bills said of the way the tax calendar works – the district doesn’t get the certified tax rate until June. “We really are doing it as quickly as we can,” he said.
The district can’t wait until August to hire teachers, Bills said.
“We can’t even wait until June to hire the teachers,” he said, “or we’d have real problems.”
Last year’s Truth-in-Taxation increase
The school district increased taxes by 6 percent in August 2014, an increase of $17.91 in tax on an average residence valued at $220,000. Taxes on businesses with the same value were raised by $32.56.
At the Truth-in-Taxation public hearing in August 2014, some commenters argued against the tax burden, noting it would carry forward to the very children that increase sought to serve, while other commenters largely focused on the merits of teachers receiving a pay increase.
School board member Craig Seegmiller, a university professor himself, made it clear that teachers’ raises that year were not contingent on the then proposed, later imposed, tax increase. At the hearing, Seegmiller said:
To me this is an agonizing decision and the teachers need to know that several hours ago we already voted to approve your raise, in fact I made the motion, your raise is already approved. This is not what this is about.
That was long since approved and even that raise doesn’t come close to expressing how we feel about what you do, it’s not enough and we treasure and value you and what you do and what you contribute every day … and your raise is already approved and safe and, again, I made the motion.
I’m having heartache because I have a lot of people that I know who are not doing great and the economy has not floated their boat and I’m concerned about them and they do need a voice and we’ve done a great job of inviting you educators here to make us look good; but there really is another side to this story and it’s painful, and it’s serious and we need to weigh it. … that is this – and I’m afraid of the long-term ramifications – we passed a bond this year by the closest vote ever in Washington County – and when we raise taxes the same year we pass the bond I want you all to realize the ramifications for that long-term.
You need to know that people have long memories and the next time we try to pass a bond and the people say that the last time we passed a bond you raised taxes; and in fact you sort of promised us that wouldn’t raise taxes, and then you passed a bond and then you did (raise taxes).
Another board member agreed with Seegmiller but noted that the teachers pay increase was the first in six years and, “the only way that we can do the things that we need to do in this county is if we self-fund.”
Listen to the Aug. 12, 2014, Truth-in-Taxation public hearing here.
How much are we paying?
Property tax increases are cumulative – once an increase is approved, it is figured into the tax rate indefinitely.
Right now, without the proposed increase, the owner of an average residence in Washington County pays $942 in property taxes to the school district each year, and an average business pays $1,713, said Kelsey White, a research analyst for the Utah Taxpayers Association. If the district passes the proposed increase, those numbers would increase to $953 and $1,734.
According to the Utah Taxpayers Association School Spending Report, the Washington County tax rate for education is 108 percent of the state average.
According to the Utah Taxpayers Association, Washington County spent $8,093 per student during the 2013-2014 school year, compared to the statewide district average of $7,688. The district’s student-to-teacher ratio is 20.6-to-1.
How it works
School districts, cities and other government entities such as cities, Washington County, the Mosquito Abatement District, the Water Conservancy District and others all have the power to collect property taxes. To increase taxes, an entity must hold a hearing to take public comment, but is not legally bound by comments received.
“That is the case with every taxing entity,” Hafen said. “If you don’t like what they decide at the public hearing, the ballot box is where you would express your concerns about that.”
By law, taxing entities are given a certified tax rate each year which produces the same total amount from property taxes as the previous year, plus any funds generated by new growth such as newly built homes or businesses, Stephenson said.
The Assessor’s office calculates the value of all property in the county, and passes that information to the Clerk/Auditor, who, with the help of the Utah State Tax Commission, establishes a certified rate. The certified rate allows a taxing entity to receive the same revenue as the previous year, but no more.
“So the rate will fluctuate, based on what the assessment was,” Hafen said. “If the assessed value of the county has gone up, the tax rate will go down, because the entity will get the same amount of revenue as the previous year. If the assessment goes down, the tax rate will go up automatically and create the same amount of revenue.”
However, if an entity wants more revenue than they would receive through the certified tax rate, Hafen said, it must go through a Truth-in-Taxation process which includes notices to taxpayers, publicly posted notices and a public hearing.
School districts in Utah are funded through both property and income taxes. Property taxes are collected by the county, while income taxes are collected and distributed by the state, Bills said.
$185 million bond for construction
In November 2013, a $185 million bond for school construction was passed by voters in a special bond election. The 20-year bond had the potential to increase property taxes $116 on an average residence per year, which at the time was valued at $225,000, and $211 on a business property of the same value.
However, so far the district has issued only about $30 million of the $185 million authorized by the bond election, Bills said.
The initial $30 million may not have made much difference in property taxes, Bills said, and the $155 million may not make much difference either because the district is paying off previously issued bonds every year.
“The goal is to keep the amount the same for the taxpayer,” Bills said.
As old debt is paid off, the district can take on new debt without needing substantial increases in the part of the tax levy dedicated to debt service, district budget analyst Aaron Brickey said. In the future, the district anticipates it should be able to issue new bonds to meet construction needs, while keeping the debt service levies consistent from year to year.
Projects funded by the initial $30 million bond include additions to Pine View and Hurricane middle schools; the Pine View High School remodel and vocational building; three elementary school remodels; and the purchase and remodel of the Water Canyon School in Hildale.
With the remaining $155 million, Bills said, the district plans to build the East Elementary replacement next to the Sunbowl on the site of Elks Baseball Field, in addition to a new middle school, intermediate school and high school in the Washington Fields area.
The middle school is needed first, Bills said, and construction is expected to begin in the fall and be completed in time for the 2017-2018 school year.
If current enrollment trends continue, the new intermediate and high schools will be completed for the 2018-2019 school year.
“It all depends on growth,” Bills said.
Every August, taxing entities and some special districts in Utah have the opportunity to raise property taxes when adopting their budget for the upcoming year. But first it must hold a public hearing called Truth in Taxation.
Washington County School District Truth-in-Taxation public hearing on the proposed tax increase will be held Aug. 11 at 6 p.m. at the Washington County School District Building, 121 W. Tabernacle St. in St. George.
The Truth-in-Taxation process is designed to give citizens an opportunity to voice their opinion and forces transparency in the taxing process. But, the taxing entity, in this case the school district, is not legally bound by the public commentary. Bills said, as quoted earlier in this report, the district board is working under the assumption that it will pass the tax increase.
This year in Washington County, only the school district is raising taxes through the Truth in Taxation process.
St. George News Editor-in-Chief Joyce Kuzmanic contributed to this report.
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