Oak Grove District 68 seeks less in property taxes
As taxing districts across Lake County determine how much to ask for next year, one school district is bucking the trend by seeking less.
With a healthy reserve in the bank and declining enrollment, the Oak Grove Elementary District 68 board has decided it can function comfortably with $500,000 less than it received in property taxes last year.
Taxpayers may see a slight reduction in their bills, but that wasn’t the point, according to school officials, who recently approved a tax levy of a little more than $13 million.
District officials have estimated the owner of a $600,000 home could pay $200 less in property taxes per year, but the actual amount could be lower — or nothing at all when bills are finalized next year.
“How much tax relief this would translate to was not part of our discussion and consideration,” said board member Tony Pirih, who chairs the Green Oaks-based district’s finance committee. “Obviously, there might be a benefit, but that was not discussed as what to do.”
Instead, Pirih said, the decision applied common sense and business sense while still being cautious. There will be no impact on day-to-day operations or building plans as a result of the reduction.
“We felt it was appropriate to ask for a levy that made sense to fund the school,” he said. “I would argue it was a modest amount.”
But not everybody agreed, as the issue split the school board and came with warnings from Superintendent Janice Matthews and others who thought it would be a mistake.
The $500,000 reduction was selected from among four possibilities ranging from the full levy to a reduction of $1 million that were formulated after months of study and analysis and aired at a public forum before the vote.
“We’ve built the fund balance. We still feel we can support the entire capital plan that we have and the programs,” said board President Jennifer Manski, who voted for the full levy and against the reduction.
The board voted 4-3 against the full levy and 5-2 in favor of the $500,000 reduction.
“It’s a demonstration of fiscal responsibility,” Manski said. “It wasn’t intended to be a gesture.”
The district has a reserve of about $10.3 million — or about two-thirds of its $15.5 million budget. Of that reserve, $3 million is earmarked for building renovations in coming years.
That still leaves the district above the 40 percent in reserves that is considered the minimum.
“It didn’t seem to be appropriate for us to continue to build a fund balance for the foreseeable future,” Manski said.
The issue generated considerable debate in the one-school elementary district that has about 870 students.
Of 15 letters sent to the school board by residents, only three showed support for the levy reduction. The majority favored going for the maximum as an investment in the school and its programs.
And in her recommendation to the board, Matthews said it would be a “grave mistake” to purposely reduce the amount of revenue during uncertain financial times.
Among her reasons were maintaining the levy would lengthen the time before a hard-to-pass referendum would be needed. She also noted that in each succeeding year, the levy will be based on taxes collected from the year before, meaning tax revenues will drop in successive years unless voters approve an increase.
She said business property tax appeals could lower the tax base and that eventually, empty nester homes will begin to sell and create a need for more teachers, space and renovations.
Tax relief legislation also could come into play at some point, and state funding shortfalls and unfunded mandates were other considerations, according to Matthews.
“That’s the way most businesses run, (but) you can’t plan for everything to go wrong,” Pirih said.
Taxing bodies each year determine how much they think they will need to operate and must file a levy with the Lake County clerk’s office by the last Tuesday in December.
Any increase in a levy generally is limited to the rate of inflation or 5 percent, whichever is less. For 2011, that number is 1.5 percent — an amount the district also will not receive, Manski noted.
While adjustments are made later, most entities file a levy that will generate the maximum amount allowed.
“Last year and this year, we’ve had more districts asking about it (reducing the levy). It’s definitely on people’s minds,” said Kipp Wilson, tax extension administrator for the Lake County clerk’s office.
Still, only one or two taxing districts in a given year will come in below the maximum allowed or abate taxes to fall below the threshold, he added.
Levying the full amount “seems to be the standard mode of operations,” Pirih said. “It’s the easiest thing to do.”