School Board proposes new income surtax levy

Friday, February 15, 2019

The Alta-Aurelia School Board ordered an election to continue a levy that, if approved, would impose an income surtax on all district residents—a change from the current levy funded solely by property taxes.

The current voter-approved Physical Plant and Equipment Levy (PPEL) tax, standing at a rate of 67 cents per $1,000 of assessed property, will expire next year.

Board members were presented Wednesday with the option to either continue that structure, funded by property owners, or switch to a new structure funded by a mix of income tax and property tax, affecting every district resident.

Voters will have the chance to give their two cents when they vote on the measure at the April 2 election, which the board filed for right under the deadline of February 15. The ballot measure requires a simple majority (50 percent) to be approved, and can be put to a vote again on the next available election date a few months after should it fail the first time.

Though the new structure would not generate any more income for the school, it would be new to renters without property, who would see it deducted in their annual state income tax filings.

The mix of property tax and income surtax could give the Board a tool should they feel the need to relieve property owners, particularly those with a large amount of property, of their tax burden. “They haven’t balked at the 67 cent property tax in the past,” though, said Superintendent Lynn Evans as board members weighed the pros and cons.

The income surtax, whose rate will be determined next year, must be set at a minimum of 1 percent if enacted.

“The argument of income surtax is, if you make more money, you should be able to pay a little bit more,” Evans said.

The rate would show up on tax returns starting in 2020 and remain in effect for 10 years. The board has not yet determined an appropriate rate, but discussion suggested something at 10 percent or less.

“The thing we want to impress on the voters is that this is not a new tax, just something that’s already on the books,” Evans said. The Board will prepare an education initiative on the measure over the next six weeks.

If approved, it will join a surtax that already exists for the Instructional Support Levy.

“It’s not increasing the tax (rate), just how we get the tax,” he said

“I kind of like (the mix of income surtax and property tax) because it gives a little more leeway,” said member Jen Kaskey. “If (the ag sector) gets really bad, it gives us a chance to move things a little bit. Valuations don’t necessarily mirror what’s happening economically in a timely manner.”

“If you have a bad year, you’re still paying property tax,” said member Jon Turnquist. “It doesn’t go away.”

PPEL funds are used for purchasing and improving grounds and buildings, constructing buildings or roads to buildings, purchasing or leasing technology and equipment, purchasing transportation equipment for students and other primarily “brick and mortar” related expenses.

Ideas tossed around at the Board’s last meeting in January included new football bleachers, busses and window replacement for energy efficiency purposes.

Bids are being put together for a full-size bus purchase to haul up to 48 passengers, with handicap accessibility. Last year’s bus purchase came in at $91,000 without handicap accessibility. A bid will be available at the Board’s next meeting on February 18.

Their busses can age quickly, as they accrue 15,000-18,000 miles per year.

“You have a significant amount of cash, so you could do relatively large projects without borrowing at all,” said Piper Jaffray consultant Matthew Gillaspie in January. “The only reason to borrow would be to give cushion with low interest rates.”

A 10-year extension to the 67-cent levy would provide an estimated maximum of $2.5 million to use for project costs. That rate is half of the legal maximum rate for PPEL levies ($1.34).

That rate is assessed to property owners based on the county assessed, taxable value of property. It is not based on the market rate of property.

The School Board has rescheduled the rest of its regular agenda for a meeting on Monday, Feb. 18, at 6:30 p.m. at Aurelia Middle School.