1013 Executive Insights

1013 Executive Insights

Tax Season Dilemma

By David Baird
KSBA Interim Executive Director

There are many challenging and difficult decisions that school board members will have to make during their careers. Some decisions may involve budgeting issues and staying within prescribed financial parameters, or hiring a new superintendent. The question of pay raises is another difficult one, realizing that staff in many districts may not have received a pay raise in several years.

But perhaps the most difficult decision for many board members centers on the issue of setting a new general property tax rate and whether to raise the tax rate. This decision has been exacerbated in the last five to six years during the so-called “Great Recession” and the loss of both state and federal tax revenues. Not only has this produced flat SEEK funding, resulting in fewer dollars per pupil, but sequestration on top of SEEK cuts has created a real crisis. Many board members have expressed to me that local boards are feeling pressured to raise taxes locally because the state legislature has failed to pass legislation that would help restore base SEEK funding and restore other funding for categorical programs. KSBA and many board members are encouraging the state legislature to pursue new avenues for creating new sources of revenue, such as gaming and significant tax reform as outlined by the governor’s Blue Ribbon Commission on Tax Reform.

So, the tax season dilemma, which usually occurs from July into September, is created as districts ponder setting their local tax rate to help maintain quality services and programs. During this period, the Kentucky Department of Education provides tax information to local districts regarding their current tax rate, how much revenue the current rate produced in the last year and how much new revenue would be realized with a rate increase that would generate up to 4 percent more in revenues than the previous year.

Every district is unique based on assessed property values that will be multiplied by the local tax rate. The real difficulty for board members in making this decision is knowing the needs of the school district and weighing that against the fact that almost no one wants his or her tax rate to go up.

KSBA has been monitoring news reports on district tax rate-setting for this season. By the end of the second week of September, here is how the data played out:

4 percent maximum rate — 27

Increase but less than 4 percent — 15

Compensating rate — 16

Other (mostly no change) — 8

Total — 66

While you will get plenty of opinions from the general public, I believe that you as board members and superintendents have a greater understanding of what needs to be done in support of your district. Whether voting to raise taxes or maintaining the status quo, I trust you will make the right choice for the right reasons for your community and your school district.  Thank you for your service to the children of Kentucky.

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