URBANA — The school board is set to consider a proposed tax levy that could mean a property-tax increase for Urbana residents.
The board's meeting is scheduled for 7:30 p.m. Tuesday at the Burkholder Administrative Service Center, 205 N. Race St., U.
The board will take final action on the tax levy in December.
The levy reflects the fact that many of the Carle Foundation's properties are now off the tax rolls. The district will ask for the full amount of property-tax money it's entitled to this year, which means other taxpayers will have to make up for that lost Carle property-tax revenue.
In Chief Financial Officer Carol Baker's estimate, taxes could go up as much as $270 for the owner of a $150,000 home, but that depends on assessed values.
"We can't afford not to," Baker said, because the district needs the money to keep operating.
The district will levy for about $31.5 million.
Last year, it asked for about $29.1 million, and its tax extension, which usually reflects taxes received, was about $28.7 million. However, the district received about $3 million less than that, as Carle was exempted from paying in property taxes.
A new state law allows Carle's exemption, because its charity care is more than what it would pay in property taxes.
The school board may also consider, when a settlement with Carle over previously collected property-tax money is final, abating property taxes used to pay toward its debt service, or what it owes for bonds it sold in 2002. The board will have to decide that by February, Baker said.
Superintendent Don Owen said Judge Chase Leonhard has scheduled a hearing for Tuesday for issues related to the Carle litigation.
The district had been holding about $10.9 million of Carle's money in escrow, from tax years 2004 through 2011.
It will return about $5.7 million to Carle once the settlement is approved. The board approved the settlement earlier this fall.
The district is expecting property taxes to go down after 2018, because then, it will be done paying off those 2002 bonds. That money was used to renovate Urbana Middle School and Leal Elementary, build an indoor pool, and refinance bonds previously sold to renovate its high school.
The district is also using $1 million each year from the school facilities sales tax to abate taxes on those bonds, Baker said. Once they're paid off, the district will also be able to pay for other facility improvements with that money.
"To me, this is a temporary issue," Baker said, adding that she has a positive outlook for the district's finances after those bonds are paid off.
Earlier in November, the board indicated to Baker during a meeting that she should levy for the full amount the district is entitled to.
The district's ability to collect property-tax revenue is limited by tax caps, and Baker told the board that lowering the levy to keep property taxes level would result in a loss of $15 million over the next five years, and more into the future.
"If you don't levy at the max, you're basically losing that money forever," Baker told the board Nov. 5. "It's money you can never get back."
The district already has a deficit budget this year, partly because of lost Carle property taxes and partly because it sold bonds to pay for construction in previous years, but will pay for those projects this year.
The district also lost about $8 million in state aid because it was actually receiving property-tax money, even though that money was disputed. It won't get any of that state money now that it has settled with Carle, Baker said.
However, it will file a claim for state aid it lost because of the timing of Carle's property-tax exemption under the new law, Baker said.
The state pays general state aid based in part on how much the district receives in property taxes.
The tax rate the county set for the district last year assumed Carle would be on the tax rolls, but it was exempted. That happened after the district set its levy last year, which means it couldn't make up for that lost revenue.
Baker said the state will repay that lost state aid as much as its appropriations allow. Historically, she said, the state pays districts about 8 percent a year of what they're owed, so it takes a while for districts to get all lost revenue. Plus, she said, there's no guarantee the state will continue to appropriate that money.