Q: How can HSSD borrow $98 million for facilities needs and lower the levy rate?
A: The district’s current debt level is less than 5% of the maximum allowed by state law. With prior facilities investments almost fully paid off (Bay Port in 1999, Bay Harbor in 2006, safety and community pool updates in 2014) the district is able to take on debt for current facilities needs without raising the levy rate. Additionally, the Board of Education has maintained a stable levy rate of $9.19 for the last six years, while avoiding more than $700,000 in interest costs by defeasing additional debt (making early payments). With reduced debt payments from prior projects, and by pausing additional debt defeasement, the levy rate can be lowered even while borrowing $98 million for facilities projects.
Q: If the HSSD tax levy rate has been stable at $9.19, why does my property tax bill show an increase?
A: The increase on the school district portion of residents’ property tax bill is due to annual increases in the estimated fair market value of the property, which is calculated by the state Department of Revenue. Over the last five years, the average fair market value increase for Howard and Suamico property owners is 5.88% according to the Wisconsin Department of Public Instruction website.
Q: If the school district tax levy rate decreases with this referendum plan, does that guarantee that my school property tax bill will decrease?
The proposed lower $8.99 tax levy rate does not guarantee that property tax bills will decrease, but it does lessen any potential increase in taxes due to rising fair market value of your property. Please continue reading for additional details and some examples.
As noted in the answer above, the fair market value of the property, determined annually by the state Department of Revenue, affects school property taxes. Using the five-year average from the answer above as a reference, we can project a range of possible outcomes of a lower $8.99 levy rate on individual tax bills.
The current $9.19 levy rate equates to $919 in property taxes per $100,000 of fair market property value. The Board of Education referendum plan to lower the levy rate to $8.99 would mean a drop of $20 on your tax bill for every $100,000 of fair market property value. This scenario is based on a 0% increase in the fair market value from 2020 to 2021. We can use that as the lower point of our range of possible outcomes.
If we instead base a scenario on Howard and Suamico’s five-year fair market value average annual increase of 5.88%, that would mean a levy rate drop from $9.19 to $8.99 would change a potential school property tax impact from an increase of $54.03 per $100,000 of property value (for a $9.19 rate) to an increase of $32.86 per $100,000 of property value (for an $8.99 rate). In this example, the new, lower $8.99 levy rate doesn’t lower your property taxes, but it does lessen the increase in taxes due to rising fair market value of your property.
If we look at a range of possible fair market value increases from 0% to the five-year average of 5.88%, we can project a property tax bill impact somewhere between a $20 decrease and a $32.86 increase for each $100,000 of property value for individual property owners if the referendum questions are approved.
If the fair market value increase should exceed the five-year average, the projected $32.86 increase could be slightly higher. Similarly, if the fair market value of Howard and Suamico properties should decrease this year (although an unlikely scenario), the $20 property tax decrease would also be slightly larger.
Q: Why do school districts used fair market value to calculate property taxes instead of assessed value?
The District's tax levy rate, or mill rate, is determined using the equalized or fair market value of property as determined by the Department of Revenue. The municipalities use the assessed value with an adjustment to get a balance between the assessed and equalized property value. This is not that the school district is receiving more property tax dollars. The dollars are just getting shifted appropriately within the municipality to account for the balance between assessed and equalized. Another way to look at it is; in Wisconsin assessed and equalized are used to apportion property taxes. Uneven changes can shift property taxes between property owners resulting in higher bills even if the levies remain the same.
DPI Explanation: The two commonly-used methods of valuing property in Wisconsin are assessed and equalized. Assessed valuation is property value as determined by the local municipal assessor on January 1 in any given year. Equalized valuation results when the Department of Revenue (DOR) applies an adjustment factor to the assessed value. The adjustment factor incorporates, among other elements, actual property sales in the municipality during the past year and is meant to ensure each type of property has comparable value regardless of local assessment practices.
Q: What happens if one question passes and the other does not or if neither question passes?
A: Given the ongoing operational funding and facilities needs of the school district, if either question or neither question is approved by voters, the district will need to return to referendum as early as allowable by state law (April 2022) to address these issues. If the operational question (question 1) is not approved, the funding for staff to reduce class sizes, compensation, and facilities maintenance will expire in 2023. Class sizes would increase to pre-2018 levels, our ability to retain and recruit teachers will be affected, and the annual facilities maintenance budget will be impacted. If the facilities question (question 2) is not approved, the facilities needs throughout the district will not be addressed, including significant repairs needed at Bay View and Forest Glen as well as HVAC updates at Meadowbrook, Lineville, Bay View, and Suamico.
Regarding levy rate if either or neither question is approved, the Board of Education made a commitment in 2018 of a stable $9.19 tax levy rate for five years of the existing referendum. This will allow the Board to maintain its strategy of aggressively paying down debt and setting up long-term facilities projects to be completed.
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