Understanding Property Tax Levies

My homework for tomorrow night’s school board meeting (the last meeting before I take office in January) has been to try to make sense of the first big item on the agenda, the 2012 Payable 2013 Property Tax Levy. As the Northfield News reported in late September, the preliminary proposal called for a levy of $15.3 million, an increase of 1.1% over the current year’s levy.

Q. How does the school district arrive at this figure?

A. The amount of the levy is determined through a process that begins with the county assessor’s office, which determines the estimated market value of properties in the district. This valuation enables a calculation of the tax capacity of the district. By looking at factors such as the district’s tax capacity and enrollment, the state determines the levy limitation for each district. The district can’t levy more than the maximum amount without voter approval.

It should be noted that the $15.3 million levy total is less than the maximum levy amount set by the state for the Northfield school district. In other words, the district has the authority to ask for more (roughly $15.4 million), but has chosen to ask taxpayers for less. This was also true last year, when the state capped the levy amount at $16 million, and the district levied just under $15.2 million.

If the district had asked for the maximum allowable amount last year ($16 million), this year’s levy ($15.3 million) would actually have represented a tax decrease. This is, in fact, the situation in some nearby school districts (such as Rosemount-Apple Valley-Eagan): because they levied the maximum allowable amount last year, and because their limit has decreased this year, their 2012 Payable 2013 tax levy represents a decrease (2.5%, in the case of Rosemount-Apple Valley-Eagan).

It should also be noted that the overall decline in Northfield’s taxing authority (the total amount it can levy in property taxes) does reflect the savings to taxpayers as a result of refinancing its debt.

This is as far as I’ve gotten in understanding this complicated issue. Tomorrow night, there will be an opportunity to hear an explanation from the district’s finance expert. There will be a presentation (a truth-in-taxation hearing) on the 2012 Payable 2013 tax levy at the school board meeting on Monday, December 10, 2012. The meeting begins at 7:00 pm, in the high school media center.

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