There are some points that don't fit neatly in a discussion of the pros and cons of the upcoming May 6 Decatur School District Referendum to increase property taxes by almost $0.3 per $100 of assessed value to help the District dig out of its financial mess. Some of these are 'in the weeds', but hopefully you'll wade in anyway.
Here are some of them:
1) Dr. Prusiecki, the new Superintendent, is demonstrating a respect for transparency and fiscal responsibility. I've had two chances to talk with him at least briefly, and I find I trust him the more I get to know him. I like his ideas about education, especially his respect for parents and his clear interest in putting the District's emphasis on what is best for the kids. He is now the caretaker of the school system. He did not cause the fiscal problems he must deal with. Our District has a chance to improve the quality of education delivered to Decatur's children with him at the helm. Further cutbacks only make that more difficult. He seems to be actively listening to the community as he goes about with his presentation. The last time I heard him, he said he has asked the CFO to obtain appraisals for the excess property the District owns; setting the stage for that property's potential sale.
2) Kirk Farmer, the CFO of the District, is the person who convinced me that a new day just might be dawning for the District when he took over the finances back in 2011. He convinced me with his transparency, willingness to share public records, and the fact that he lives in Decatur and is one of us. Farmer has been working diligently to dig us out of the financial hole we are in, and that is no mean feat. But, he needs more time. As you'll read below, other factors have caught up with the District finances and with each passing year his task becomes harder and harder to do. Passing the Referendum would give a bit of ease back into paying the bills - not much ease, but a bit.
3) Make no mistake about it, the various taxing units are at war with one another in their attempt to push the property tax cap/circuit breaker penalties off on each other. Witness this year's move by the City to expand the IMPD taxing district from the old City limits to the entire County. The whole reason was to lower tax rates in the old City and raise them in the rest of the County - thereby pushing the tax cap/circuit breaker penalty outward.
4) With our tax rate topping 4%, a large fraction of property in Decatur is hitting the tax cap maximums. Estimates last year, when the rates were lower, suggested that 2/3rds of Decatur properties were at the caps. That means that when another taxing unit increases the amount of money they want to raise through property taxes, it hits the School District's bottom line. In the curious world of tax cap math, one dollar increase in another budget causes a 50 cent decrease in the amount of money the School District can collect.
5) Between 2013 and 2014, 5 of the 7 taxing units who charge property taxes in Decatur raised their tax rates - this despite the fact that the total assessed value rose, so they clearly were increasing their tax levy (the total amount of taxes they were charging). Only the School District and IndyGo lowered their tax rate. Most of the increases were single digit, but the Decatur Township rate rose 25% and the City tax rate rose 41%. Again, every dollar increase from another taxing unit causes a 50 cent decrease in the amount of revenue the School District can collect.
6) The debt problem is high and long term. The district has 6 outstanding bonds, some of which do not get paid off until 2028. Additionally, the district is paying on short term loans (the District was living off loans for a while; $2.5 M still owed). The short term loans should be paid off in 2016 - so there is some bit of relief coming. The payment due on the bonds rises from $13.4 M this year to $14.5 M in 2019, when it levels off for a couple of years before dropping just below $11 M from 2023 through 2028. In 2016 the terms of the bonds will allow the District to refinance them, hopefully at a lower rate. The legislature extended the opportunity for the District to extend the term of the bonds by 10 years - not ideal, but still it would lower the payment due and help the District make ends meet.
7) With some help coming by 2017, there are two ways of looking at the Referendum - either make the District struggle with finances for two more years through operating budget cuts, or, let them get over this hump in a way that leaves the District at its current operating levels.
8) If we vote for the Referendum, would the District use the money only to get through the worst of the crisis, or would they get used to the extra money come 2017 and become dependent upon it? I still have deep concerns about continuing this tax increase for more than 7 years. I think our community can bite the bullet as far as quality growth is concerned for a short period. But, if we go beyond the short term, I fear we will never recover and we won't really get a chance to attract that move-up housing, basic retail, and good hometown jobs that everyone else in Marion County has.
9) The best I can tell, a provision in Senate Bill 118, that would create a sunset date for all old TIF districts, made it into law. The Legislative Services Agency analysis states that an exception for the Consolidated Downtown TIF was created, but I cannot find that exception in the final version of the bill (see page 28). More on this bill later, at it makes substantial changes in the oversight of the Metropolitan Development Commission. If this did get into law, then the Airport TIF, including the Ameriplex portion, would have to sunset by June 30, 2025 unless the City floats new bonds with a longer term by July 1, 2015. That is a long way away, but the future finances of our Township and its schools could be a bit brighter than it was.
This all brings us back to the start. The most important thing about this Referendum is that it reflect the will of the Decatur community. For that to be the case, everyone should show up on May 6 and vote. And, for that to happen, everyone who is 18 years or older should be sure to register to vote before the April 7 deadline. Links to easy, online registration are in the sidebar of this blog. I hope to see you at the polls on May 6.
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