Most Lincoln Board of Education candidates are reluctant to advocate -- at least at this juncture -- for reducing the district’s tax levy amid what will be an unexpected revenue increase from a revaluation of homes in Lancaster County.
The four incumbents cited uncertainty about what the Legislature will do with state aid, the need to balance funding over multiple years and continued brisk enrollment growth. The one challenger said he'd lower the levy and give money back to taxpayers.
“We have a lot of variables with our budget,†said Barb Baier, who is running for her fourth term in northwest Lincoln’s District 3. “We need to see what the Legislature and the governor comes up with (with the state aid formula) and we need to take that into consideration. So it’s hard to say how that will play out.â€
Baier is one of three incumbents running unopposed, along with Kathy Danek in northeast Lincoln’s District 1 and Don Mayhew in southwest Lincoln’s District 7. Both Mayhew and Danek are seeking their fifth terms.
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Lanny Boswell, seeking his second term in District 5 in south and southeast Lincoln, is being challenged by Lincoln businessman and motivational speaker Preston Harris.
Both will advance from Tuesday's primary election to the May 2 general election.
Lincoln’s booming housing market prompted the Lancaster County Assessor to do a total revaluation of residential property a year earlier than normal.
The assessor expects the total residential valuation, after protests are considered, to increase by 10.5 percent. And without adjustments in the tax rate, local governments will see a larger-than-anticipated influx of property tax revenue.
The revaluation -- which resulted in higher assessments for many homeowners -- prompted the City Council to pass a resolution putting council members on record as leaving the already-approved two-year budget alone, and would mean a reduction in the city’s tax rate for next year.
Lincoln Public Schools, on the other hand, has yet to get to work in earnest on its 2017-18 budget, which makes up a significantly larger portion -- more than 60 percent -- of Lincoln homeowners’ property tax bill.
The two main sources of the school district’s general fund budget are property taxes and state aid, although federal funds and some other sources factor in.
In building its annual budget, LPS relies on a three-year forecast, because an increase in property tax revenue one year generally will mean a decrease in state aid the following year, said Liz Standish, associate superintendent of business affairs. The district will often put money in cash reserve -- or pull it out -- to help balance out the funding.
In building the current 2016-17 budget, the district forecast a 2.3 percent increase in property tax revenue (the actual increase was 2.28 percent), a 2 percent increase for 2017-18 and a 7 percent increase for 2018-19 (when the total revaluation was scheduled to happen).
The district's current $402.4 million general fund budget included $202.3 million in property tax revenue. The district levied the state-imposed maximum $1.05 per $100 of valuation, as it has for the previous three years, although it shifted a half-cent of the tax levy to a building fund this year.
Because the revaluation of residential property does not take into account commercial property or new property, city finance staff estimated the overall valuations for the city could increase 6.2 percent.
LPS officials haven’t done similar calculations, but the school district's property tax base is nearly -- although not exactly -- the same.
A 6.2 percent increase in valuation, with the same $1.05 tax levy, would bring in an additional $12.7 million in tax revenue for LPS next year.
At the last board meeting, the Lincoln Independent Business Association called on the school board to adjust the levy to give the windfall back to taxpayers.
Harris, who is challenging Boswell for the District 5 seat and is on LIBA’s school liaison committee, said he would adjust the budget to give homeowners relief.
In return, he said, he’d ask the community to step up and volunteer in the schools.
“Instead of taking their money, I’d ask people for their time to help support the district,†Harris said. “It would help the school district build a community of people wanting to see students succeed.â€
Boswell said lowering the levy is something the board has to look at but that the property tax is just one of the factors the district must consider.
“We have to look at all of that and the impact an increase in revenue would have on state aid next year,†he said.
Harris said money currently in the district cash reserve would act as a buffer, and lowering the tax levy would gain taxpayers' trust so it would be easier if the district found it needed to raise it in the future.
Danek and Mayhew said pending legislative bills that could dramatically affect state aid and school budgets require the board to be cautious.
But questions about the levy miss the point, Mayhew said, because the district could reduce its budget by millions and only give homeowners a few dollars in property tax relief.
The real problem is over-reliance on property taxes to fund schools, he said.
"The real problem is the governor and Legislature lack the political will to close sales tax exemptions and use the money to support state aid and reduce property taxes."
Both Danek and Baier said enrollment growth -- which has been close to 1,000 students each year in recent years -- must be taken into consideration.
“I appreciate LIBA’s interest in sharing their take on the budget, but I have to disagree a little with the word ‘windfall,’†Baier said.
In the 12 years she’s been on the board, it has never been able to budget for all the district’s needs, she said.
“We’d have to look at all the variables before deciding whether to lower our levy.â€
Danek said the continued growth of the district makes that seem unlikely.
“With drawing 1,000 kids a year I don’t see a pass for us to lower the levy,†she said. “Couple that with the Legislative proposals and it makes me more unsure than normal.â€