Remain Vigilant about Local School Fund Property Taxes

by Fred Birnbaum

Fred Birnbaum is a resident of Ivins, Utah. He worked for 25 years in the paper and packaging industry, his last position was as Director of Business and Financial Analysis at Boise Inc (formerly Boise Cascade). He holds an MBA and a BA in political science. Currently he works part-time for the Idaho Freedom Foundation as the Director of Legislative Affairs when the legislature is in session. This allows Fred to spend the bulk of the year in sunny southern Utah. The opinions in this article have no connection to the Idaho Freedom Foundation nor to his work for that organization. These views are his own. 

Truth in Taxation Hearing

On August 7, I attended the Truth in Taxation hearing at Dixie High School. The hearing was required by state law because the local school fund taxing entity was proposing an increase that triggered the hearing. Yet according to the school district administrator, Brent Bills, this really wasn’t a tax increase at all. An anomaly in the law triggered the meeting, more on that later.

Washington County School Board

Key takeaways:

• The local school fund triggered the Truth in Taxation (TNT) meeting by combining the capital levy and the debt service levy into a single capital levy. Since the debt service levy was not a certified levy (subject to TNT), the large increase in the capital levy was recorded as a large increase on our property tax bills. It was not.
  

• If you compare the dollar change in your local school fund tax line to the county general fund, you will note the following: On my tax bill the local school fund went from $1801.79 in 2022 to $1628.72 in 2023, a (9.6%) DECREASE. The County General Fund went from $198.68 to $180.20, a (9.3%) DECREASE. Yet the County did not hold a TNT meeting. This suggests to me that the change in the school fund this year was driven by the consolidation of the levies, not a budget increase.

• Property taxes for individual homeowners can go up more than the budget increase percentage when you have vastly increased property values. Why is that? Because the property tax budget is divided by the total taxable market value in a district, which is a large group of property owners. If your house increases by more than the average percentage increase, you will get a tax shift to your home’s property tax bill.
  

• Trouble lies ahead. There is an old saying that low spending leads to low taxation and the Washington County School District has been on a multi-year spending blowout that will lead to higher taxation in the future if it is not scaled back.
  
  

Taxpayers can prepare for next time

The district website publishes adopted budget presentations which contain enough data for taxpayers to ask tough questions in future meetings. I am referring to the Washington County School District, Adopted Budget 2023-24, also referred to as the Comprehensive Annual Budget (CAB).

40.3% of district revenues come from property taxes and 47.3% from state government.

• On page 12 of the 23-24 CAB, part of which is pictured below, we see that school enrollment for the last 4 years, has grown an average annual rate of 4.6%. But for the next four years the annual projected increase in school enrollment is only 1.1% per year. The Capital Plan was stated as $775 million. The fact that enrollment growth is minimal and the Capital plan, so large, should raise a red flag. Citizens need to follow up as capital expenditures are expected to grow for several years and over 95% of the 2023-24 capital budget comes from property taxes.

• On page 55 of the same document, the summary of maintenance and operations expenditure growth from 2019 to 2024 is alarming.
  

  • Property tax budgets are up an average of 11.1% per year for 4 years, from 2019-24. Note in my research this has been driven by new construction in WA county which reflects the fact that the total assessed value of property in this period has nearly doubled. The district gets the new construction piece budget increase without having to go to voters with TNT hearings.

  • State appropriated dollars are up 9.6% per year for 4 years, a total increase of over 38%.

  • Federal dollars are up 10.6% per year for 4 years, a total increase of over 40%. Note that these will likely decline as Covid related funds are decreasing.

  • Salaries are up 11.7% per year for 4 years, a total increase of over 46%.

  • Purchased services are up 18.2% per year for 4 years, a total increase of over 72%.

  • Supplies and materials are up 19.8% per year for 4 years, a total increase of over 79%.

  • Equipment purchases are up 24.3% per year for 4 years, a total increase off over 97%.

Summary

In summary, the Washington County School District has used the huge growth in the local population and property tax base along with increased state and federal funds to significantly grow their operating budget. It is very difficult for any government entity to reduce spending. 

Spending works like a ratchet, it moves in one direction. What must concern Washington County taxpayers is that the school district is now used to this largesse. If a downturn comes, unless budgets are reduced, expect potentially higher property taxes if valuations decrease and budgets don’t decrease proportionally.

Stay involved!