Sioux City Community School District property owners recently received their new property assessments in the mail. Many were disappointed to see another increase. On average, nearly 9% for residential taxpayers and 7% for commercial property.
While we recognize that the Sioux City school district only represents a portion of the overall property tax bill owed, we strongly believe that tax relief is owed to our taxpayers by the district.
At its most recent meeting on April 1, the district's Finance Committee discussed the significant growth in the district’s spending authority and cash balances. At the end of June 2021, it is estimated the cash balances will grow to approximately $70 million. In fact, the district is no longer allowed to levy for the cash reserve due to the state law limiting excess cash balances.
This cash balance growth is directly obtained from excess property tax levies. These excess levies have been ongoing for several years. Average cash balances ($39.4 million to $43.0 million) grew by $3.6 million from July 2018 to June 2019, growth from 2019 to 2020 ($43.0 million to $48.8 million) was $5.8 million dollars, and growth from 2020 to 2021 ($48.8 million to $56.2 million) will approximate $7.4 million. It is estimated the district will likely have approximately $70 million on June 30, 2021.
These do not include ESSER funds (federal COVID relief monies) as the district is required to spend any amounts received and is not able to utilize those funds directly for property tax relief or build cash reserves. Finally, the committee discussed the continued growth of spending authority balances, which are at record levels.
These levels of spending authority are well beyond any “decency” test and demonstrate that taxpayers deserve a small break in the coming years. Make no mistake, there are material assessment increases for the coming period which will have real and significant impact on taxpayers, especially on our small business owners, low income families, and fixed income households. This further supports our request to reduce the levy rate now.
To assuage the fears expressed by Dr. Paul Gausman, regarding this year’s labor settlement costs, we have recommended the suggested tax savings to approximate $1.5 million annually. This represents approximately $0.49 in levy reduction. The district could comfortably cover any potential cost increases in labor contracts beyond planned amounts.
Furthermore, when conducting a long-term analysis of property tax assessments in the district, we found substantial increases still stemming from the state's (property valuation) equalization order a few years ago. This has caused real increases to tax bills for residential, commercial, and multi-residential property owners. All elected officials, not just school board members, need to realize that a drop in the levy rate does not necessarily correlate to a lower tax bill. The lower levy rate we propose ($12.48 per $1,000 of assessed valuation) will be largely offset by continued increases in taxable property valuation, as the table below demonstrates.
Any tax decrease should be examined through the lens of sustainability. We believe this letter demonstrates the district could comfortably sustain an annual tax cut of $1.5 million per year for the next eight years. Property tax valuation increases will most likely offset most of the impact from the lower levy rate. This simply means changing the tax rate from the district proposed amount of $12.97 to our proposed rate of $12.48. It also leaves a substantive "cushion" for unforeseen labor increases beyond planned amounts.
The district has built record levels of cash and spending authority on the backs of taxpayers. We have overtaxed property owners. Further, hoarding of taxpayer funds is not justified or needed. Taxpayers deserve fair treatment.
Daniel Greenwell and Taylor Goodvin are members of the Sioux City Community School Board. This opinion piece does not represent a majority of the school board.