School district considers options for property tax
“What more valuable asset do we have in San Juan County than our school children, and what should we put more dollars in that we have available than our school children?” asked San Juan School Board member Debbie Christiansen at the May 15 meeting of the San Juan School Board.
“We could cut the tax rate, so we are the lowest and then slash everything, so our kids don’t have a good education. I look at what we have done over the last five or six years, and I can’t see where we have been irresponsible in spending taxpayer money. I don’t know how much deeper we can dig and be able to provide our kids with the education that they deserve.”
Christiansen’s comments came as part of a lengthy discussion regarding the 2013 budget and suggestions that the district cut the property tax levy next year.
San Juan County Commissioner Phil Lyman asked the board to consider the situation the business community is facing. “This is truly getting to the point of the final straw that will break the camel’s back. I believe there is a way to prosperity and affluence in this county, but it has to be through a reduction in taxes,” said Lyman, who asked the board to lower the tax rate by 30 percent.
Lyman said that the district has increased property tax collections from $4.2 million in 2006 to $7.4 million in 2011.
Blanding business owner Casey Black said that the general feeling he gets from taxpayers is there is too much administration at the district office. Black said paying more taxes is more than business owners can afford, causing some to base their operations in other areas.
R.T. Nielsen, District Secondary Supervisor, said that decisions are geared to being fiscally responsible. Nielsen said that learning needs to take place on both sides to fully appreciate the things that are being done, pointing out that many administrators work on programs that are required and paid for through federal funding.
Board President Nelson Yellowman praised the district, stating that in New Mexico, of 21 public schools near or on the reservation, only two made Adequate Yearly Progress, while of the 12 schools in San Juan County, only two did not.
“I think we are doing pretty darn good,” said Yellowman, who credited the district administration with helping teachers and students. “I commend them for the great things they are doing. To the public I would like to say, your tax money is being spent well.”
Superintendant Doug Wright said there have been dramatic cuts at district office over past ten years. “The regulatory things we deal with are massive,” said Wright. “We have made significant inroads into scaling back our administration at the district level to the point that I’m not sure we can cut much more and still meet all the mandates without impacting school children.”
District Business Administrator Clayton Holt said that over the past 10 years, the district has eliminated one administrator and 11 other positions at the district office.
Ron Baird, manager of Gouldings in Monument Valley, told the board that instead of growing and expanding and hiring people to help grow the economy, excess taxes deplete the county. Baird was asked if he felt as strongly about excess taxation the previous year before his property value was increased. Baird responded that he did not. Board member Debbie Christiansen said this shows it is property valuation that is causing the greater burden, which the district has no control over.
Holt said that the basic school levy, which is 20 percent of the total levy, is set by the state legislature. The board can choose to not levy that tax, but will lose all state funding if they do. Holt said the amount the district receives from the state stays the same regardless of the valuation of the county.
Holt said that 50 percent of the levy is matched by the state and if the board cuts these tax rates, the district would lose significant money in the match.
Much of the remaining 30 percent of the property tax is set aside for capital funds. Holt said if the board does not to touch the matched levies or the state levy, then all of the change would come in the capital levy and a 30 percent tax decrease would zero out the capital fund.
A major concern with eliminating the capital fund is the effect such a change will have on replacing the district’s aging buildings. The core of all schools in the northern portion of the district are more than 50 years old and eventually will need to be replaced.
Holt said the district spends approximately $2 million a year for building maintenance. The remaining funds are placed in reserve to replace buildings. Holt reported that Blanding Elementary School is likely to be the next building to be replaced. He expressed concern that the district could not afford such a project if they were to stop saving.
Holt reported that by 2050, the district would need $431 million to replace all buildings that are 75 years or older. “At some point, this bill is going to be paid by someone,” said Holt.
“If tax payers in Blanding or Monticello were left to pay the bill for their schools, they couldn’t even replace the roof on one school. They could barely afford to fix the broken windows with the amount that we would collect in those communities,” said Holt. He reminded the board that taxpayers are on their own for capital projects and get no help from the state.
Holt said of the $1 billion in property value in the county, $700 million is in centrally assessed property. The Resolute oil field in Aneth is more than 25 percent of all valuation in the county, and the ten centrally assessed properties account for 50 percent of all taxes paid.
In contrast, the total assessed value of everything in Blanding is $84 million and $65 million in Monticello. He also reminded the board they can’t cut the tax for residents without cutting the tax for centrally assessed properties.
Board member Bill Boyle pointed out that much of the money placed in the capital projects reserves is a voted leeway, approved in 2006 by more than 70 percent of San Juan County voters as a way to replace the ageing infrastructure.
“I feel a sense of responsibility to the voters who resoundingly approved that strategy,” said Boyle. “If we were to cut the voted leeway, it would slow the capital projects almost to a halt. We are willing to do that if that’s what the majority say, but a few years ago the strong majority approved of the voted leeway.”
Christiansen expressed the hope that the public will recognize that because of the voted leeway, San Juan School District is one of the few school districts in the state that is replacing aging infrastructure while remaining debt free. “We want to pay as we go,” said Christiansen. “It’s beyond responsible of us to try to be a debt free district and not live beyond our means.”
Holt reported that there are very few areas where the district has the discretion to make cuts, specifically in class size, extracurricular activities, and capital projects. Holt asked if residents are willing to live with the changes the board can make in those areas.
Nielson said the district can opt for larger class sizes but parents have been unwilling to accept larger classes in the past.
Holt presented a graph showing the property value per student in every Utah school district, with Park City on the high end at $2.5 million per student and South Sanpete the lowest at $167,000 per student. San Juan County ranks 23rd in the state at $318,000. The neighboring districts of Kane and Grand are at $1 million and $877,000, respectively. On the amount collected per student through property taxes, San Juan is 21st in the state, at $2,553 per student.
Holt said that $2 million in cuts have made been to balance increased costs in other areas. Holt pointed out that state aid has decreased and more has been collected from taxpayers to cover the deficit.
Holt said the increased collections have come from new growth and increased centrally assessed value and not from revalued locally assessed properties. He added that if the board had not accepted the state certified rate and stayed revenue neutral, they would have had to cut more than $1.8 million, in addition to the $4.2 million that was already cut.
Holt said, “People get the idea that the school district has a huge windfall of money that’s coming in... when most of the money has been used to offset the reductions in state funding.”
Holt said cuts have been made to pay for increasing costs of health insurance, fuel, retirement and other items in order to propose a balanced budget. Superintendant Wright said that while other districts are raising taxes, San Juan School District made the conscious decision that they would collect on new growth but would not increase their tax levies.
Board member Merri Shumway said that in general, government entities don’t fall in line with what businesses and homeowners deal with in the real world. “In general, government entities choose not to go as far and be hurt as bad as real businessmen, real people in the real world.”
An impassioned Superintendent Wright told Shumway, “San Juan School District employees are real people suffering the same kinds of problems, and when their income is cut back, they are unable to spend as much money at local businesses. We have provided a number of jobs to individuals locally with construction projects going on. That stimulates the economy. It’s not like government spending does not benefit the private sector. I think that has to be factored in as well.”
Wright continued, “I get offended when you tell me I’m not a real person because I happen to work for a government entity and I don’t suffer anything like ‘real people’ do. I think I provide a service, and school district employees across the board provide a service, and they are not over paid. They are not hogs at the government trough, which is much of the conversation that is currently going on.”
Shumway clarified her statements saying she was speaking of government services vs. private sector, meaning people who have to produce something and make a profit in order to stay in business.
Boyle said that cuts over the past four years total $4.2 million or roughly 10 percent of the operations budget. Boyle, also a business owner, said his business has been impacted, and it has been painful.
“I see a 10 percent cut in school district expenditures over the past four years and think it may be in the ball park of what I have faced in my business,” said Boyle. “We have made painful decisions. We have frozen salaries, cut positions, eliminated programs, put off things that probably needed to be done. As far as an operating budget, we have been very responsible.”
The board discussed the possibility of leaving the basic rate as it is and making a five percent cut to the capital projects fund. They also discussed keeping the basic rate the same and holding everything else revenue neutral, collecting the same amount from taxes in 2013, as they did in 2012. Christiansen said five percent may not be much, but if all taxing entities do the same, it would make a difference.
Holt told the board he does not see a way to cut taxes 30 percent without making major changes in regular program or zeroing out the capital projects. Shumway said whatever they decide for this year does not mean they have to do it again next year but urged the board to respond to people who are asking for help. Shumway suggested the board cut 20-25 percent from the capital projects.
Christiansen said, “It sure feels like the weight of the whole tax world has been placed on the school district’s shoulders, but we will try to do our best.”
Superintendant Wright told those present, “Ultimately, the school board, district administration, and all of the business owners are really all on the same page. We want to provide a proper level of quality education for our students. The question is how do we afford that, and how do we generate the funding to do so? The District is caught in the middle of a much larger issue with the reevaluation of property, which we really had no control over.”
The board has scheduled a work meeting on June 7 to work toward a solution before presenting a budget to the public at a June 19 meeting. They seek public input before making a final decision. The proposed budget can be found at www.sanjuanschools.org.