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News
School board moves to maintain tax rate : News : Oswego Ledger-Sentinel : Hometown Newspaper for Oswego and Montgomery, IllinoisSchool board moves to maintain tax rate
| Rate to remain at promised level
| by Lyle R. Rolfe
| 8/27/2009
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Steps were taken by Oswego School District Board members Monday night to keep the district's tax rate at the $5.06 per hundred of assessed valuation as promised in 2006 when voters approved a $450 million General Obligation bond issue.
"That promise is good as long as the EAV keeps growing as your expenses increase and your mortgage payment increases," Stuart Whitt, school district attorney, said.
"But the EAV was not growing and the board foresaw this so they adopted a resolution giving Kris Monn, then assistant superintendent for finance, the power to abate $3.5 million from that Bond and Interest fund," he said.
This is the fund that was to be used to make payments on the bonds sold to finance capital projects in the district.
He said this allowed the district to keep the tax rate at the promised $5.06 rather than the $5.21 it would have been because of the stagnate EAV.
Under the $5.06 tax rate, the owner of a home valued at $250,000 that does not claim any available exemptions pays $4,216 in property taxes to the school district annually. Property tax bills are calculated by multiplying the EAV of each property times the total tax rate.
They took action Monday night on a way to repay the $3.5 million.
Whitt said they had $129,280 in interest earned on funds in the Bond and Interest Fund. Also, they refinanced some of their current bonds reducing interest rates from just above five percent to about two percent which saved the district $463,028.
This left them with a balance of $2,943,205 on the Oct. 1 bond and interest payment, he said. To make up this amount, the board approved transferring the money from the Capital Projects Fund, money that was to be used for various school building construction projects.
Whitt said that if the EAV does not grow in the future, the problem becomes even more complicated for the district.
"If the EAV outpaces the Consumer Price Index (CPI), the tax rate goes down. But if the EAV does not grow or goes down, the tax rate goes up," he said, recalling that last year the CPI out paced the EAV.
When that happened he explained that the CPI was 4.1 percent, but the EAV went up only five percent, which forced the tax rate to increase.
"You take last year's property tax receipts and multiple them by the CPI and that's what you get for this year's tax funds," he said.
All tax cap counties in the state will find that property values will go down, but governments will still get their money and tax rates will go up he noted.
"This means people will not pay less taxes even though their property values go down, and this will happen to all tax cap counties in the state," he said.
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