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On Oct. 22, I attended a budget forecasting workshop in Cedar Rapids along with the Highland business manager.
The conference was sponsored by the Iowa School Finance Corporation and Piper Jaffrey. The intent of the workshop is to project future budget needs based on enrollment trends, state aid and property valuations.
The news was much more positive than when we attended this workshop a year ago.
If you recall, Highland had a big drop in enrollment a year ago, and we came out of this forecasting workshop knowing that we needed to reduce $250,000 out of the budget to stay even.
The district actually reduced about $300,000 in expenses prior to the 2018-19 school year. The enrollment figure for resident enrollment was up this year, and the district’s financial status is in better shape.
While the district will need to be prudent in its expenditures, it appears the future is brighter than before. Home construction projections are to grow, which will increase resident enrollment and valuations in the district.
The news for property taxpayers in the district is positive. Four years ago, the district levy was over $16.30 per $1,000 of assessed value. For the current school year, the levy rate is $13.19. That is a drop of more than $3 or about 19 percent.
Projections show a continued decline in the property tax rate in the future. Why? What is causing this pull back in property tax rates?
There are three significant reasons why property taxes are falling in the Highland Community School District.
The first was when the Riverside Casino and Resort came off the tax increment financing for the county, which means they became part of the valuation in the district. Valuations are important in determining tax rates.
When the district completes the budget, a formula calculates the dollars the district is eligible to raise as a tax asking. That formula then spreads those tax dollars over the property values recorded throughout the district.
Through the use of tax increment financing, municipalities typically divert future property tax revenue increases from a defined area or district toward an economic development project or public improvement project in the community.
TIF subsidies are not appropriated directly from a tax entities budget, but the entity incurs loss through foregone tax revenue. Many cities and counties will use TIF incentives to invite new construction in the area.
The casino was given a 10-year TIF. When the casino became a part of the district’s valuation, it created a significant drop in property tax dollars needed from other sources to raise the funds needed.
As a result the district’s property tax rate went from $16.30 to $14.78, then $14.19 and now the current $13.19.
The current home building expansion that is going on in the district is the second reason why property taxes are falling.
Several subdivisions and new homes being built in Riverside are increasing the valuation throughout the district, which is good news for property taxpayers when it comes to school property tax.
Increased valuations mean the spreading out of tax asking.