15 August, 2014 (All day)
You own a home in Morgan County valued at $276,000, the average assessed value in the county. Last year, you paid $1,184 in taxes according to the 0.007805 certified tax rate set by the Utah State Tax Commission.
In the meantime, more homes have been built, new businesses have come to the county and some home values have increased, boosting the assessed valuation of the county. Now that there are more tax payers in the county to spread the tax burden among, each home owner would have to pay a smaller piece of the pie to produce the same amount of taxes that were produced last year.
So, the Utah State Tax Commission lowered the rate to 0.00145. That means you would have to pay $1,084 this year in property taxes, a $100 reduction.
Although the assessed valuation of the county increased over the last year, those new homes could bring as many as 150 more school children into the county. The property taxes paid on one home do not cover the increased cost of educating one child, Morgan County School Board members said Tuesday night.
“More taxes coming in sounds wonderful, but growth is a burden on the school board,” Board Member Ken Durrant said. “We are running into a brick wall. Until this community changes, the burden is on the homeowners.”
To complicate matters, the Union Pacific Railroad contested the amount of taxes it has paid since 2007. The railroad won in court, and now the Morgan County School District will have $79,346 less in tax revenue this year. That is a big chunk of change that must come out of a tight budget.
So, the board is proposing to increase tax rates above the new Utah State Tax Commission rate. The Morgan County School Board is geared up to set a tax rate of 0.007599, which would mean you owe $1,153 in property taxes this year.
That would be a $31 savings compared to last year, but not quite the $100 in savings you could have realized if the board would have stuck to the new tax rate. School officials are quick to point out that either way, it is a savings.
To some residents who watched the 1,600 to 884 defeat of the voted local levy in June of 2013, raising tax rates in any form seems suspect.
“Why a tax increase when the voters were strong, unanimous in not wanting one?” asked resident Lynelle Butterfield. “I feel like there is a mistake somewhere, and to cover mistakes it goes to the tax payers.”
That is why the school board refrained from increasing tax rates back up to 2013 levels, Superintendent Doug Jacobs said, and pass some savings on to taxpayers.
The added expense that comes along with rapid growth, along with the Union Pacific judgment recover combine to present the school district with a budgeting dilemma. School Board Member Mark Farmer said the district growth task force is exploring how to budget for long-term capital needs as well as expected continued growth.
The board’s proposed rate would produce $348,500 in additional revenue, which would be used to make up the $79,346 Union Pacific judgment recovery as well as pay for a $125,000 new school bus, $94,000 in school climate controls, and $50,000 in technology infrastructure and hardware.
Former Morgan superintendent Ron Wolff said he was disappointed the tax increase could not be spent reducing class sizes—some elementary school class sizes are at 35—and increase staff. He also suggested the district replace more than one bus each year.
“If you are not replacing 10 percent of your buses every year, you will get in the position where you will need to buy four or five in one year,” Wolff said. “You cannot afford that.”
“The budget for buses each year went away when we tightened our belt,” Farmer said.
Instead, that money went to saving teachers’ jobs, District Business Manager D’Lynn Poll said.
If keeping up with the current bus fleet isn’t enough, more students will mean the necessity of adding more bus routes, Poll said.
District officials said it is also difficult to keep up with and budget for tax appeals such as Union Pacific’s. Many entities contest taxes, but few actually proceed through the court process and win. Some bigger school districts include a contingency in their budget for judgment recoveries, but Morgan doesn’t have that luxury, Farmer said.
“We don’t want to hold money back from teachers for something that happens every four to five years,” Farmer said. “It is not practical at this point.”
“We are down to bare bones,” Jacobs said.
The state allows the judgment recovery process, where local school districts can set tax rates, to compensate for taxes lost after entities appeal tax valuations, Jacobs said.
Since county home owners had not received their tax notices in the mail before Tuesday’s truth in taxation hearing, the school board could not officially set the tax rate. The board will hold a second hearing for that purpose Aug. 26 at 6 p.m. in the district board room.
And don’t expect taxes to go down in the future, school board members said.
“If you are asking if we are decreasing taxes next year, I am sure it will be absorbed with new students,” Durrant said. “We are facing bigger crunches” than the four items the increase will fund, he said. “I don’t see it going away.”
“It may not be these four things next year. Even if we do not have those things in the budget next year, other things will take their place. Board Member Jody Hipwell said. “ I would expect lowering class sizes and hiring new teachers are in the budget for next year.”
Farmer said technology improvements would likely be a need for the next five years, “just to catch up.” Hipwell said accreditation officials evaluating Morgan High School a few years back were very concerned with the school’s technology and recommended improvements.
“We have 500 to 600 computers that are eight years old,” Hipwell said. “One day they will all die at once. The biggest nightmare would be if they all go down in May during testing.”
Hipwell noted that the slow economy caused the district to “get out of cycle” with replacing old computers. In response, the Morgan Education Foundation has spearheaded an effort to raise $750,000 to help “modernize” technology at all area schools. They are seeking state, district and private donors.