Preliminary PW-S budget calls for 1% decrease one year after referendum-driven hike
Port Washington-Saukville School District property taxes are expected to stabilize after spiking last year as the district adjusts to life with $49.4 million in referendum debt to repay.
The School Board on Monday approved a preliminary 2016-17 budget that calls for a 1% decrease in the tax rate, expected to save the average taxpayer $9.
That’s coming off a year in which the tax rate shot up 13.9%, costing the average taxpayer about $240, due to the first referendum debt payment and a $1 million cut in state aid, part of which was because of referendum borrowing.
Shortly after voters approved the April 2015 referendum, which authorized funding for a $45.6 million Port Washington High School renovation and $3.8 million elementary school addition and parking lot project, the district sold municipal bonds to finance $33 million of the work.
Even though work on the schools would not begin for about another year, officials wanted to take advantage of low interest rates, unaware of the impact borrowing would have on the more than $13 million in equalized state aid the district receives annually.
Municipal bonds sold to finance two-thirds of the projects were purchased by investors at a premium rate, in other words for more than their face value, which is not uncommon when interest rates are extremely low.
The difference between the par value and the premium resulted in about $2 million in proceeds for the district, and without an offsetting cost in that school year, that made the district wealthier under the complex state aid formula and cost it $440,000 in aid. The district then refinanced $440,000 of referendum debt to lessen the impact on taxpayers.
State aid is expected to rebound by $872,367 in the next school year, which starts July 1.
Also working in the district’s favor, its health insurance premium will decrease by 1.8%, saving roughly $50,000, and benefits for several retirees are expiring.
But challenges persist. According to early predictions, the district will have 31 fewer students, which affects the state aid it receives, its property and casualty insurance premiums are increasing and it has no room to increase spending under the state levy limit.
“There are not too many changes from the previous year,” Director of Business Services Jim Froemming said. “Some people would say that’s a good thing, but it’s not a great thing. The district won’t have much more money to spend in this budget.”
He said the decline in enrollment is expected to be a temporary trend caused by the graduation of several larger high school classes. Enrollment in the elementary school is strong, Froemming noted.
The district will make a $1.6 million referendum debt payment in the 2016-17 school year. That amount will increase annually, hitting $2.6 million in the 2021-22 school year before tapering off slightly. It is expected to take 25 years to repay the debt.
The district will also make payments of $236,954 for its Wisconsin Retirement System debt and $191,880 for its energy efficiency project debt, which according to the district resulted in a $20,000 savings this school year.
The budget calls for a tax levy of $15.9 million, an increase of $74,307, or 0.47%. But because equalized property values in the district are expected to increase by at least 1.5%, the tax rate is expected to decrease slightly.
The budget, which is approved in June to allow the district to begin spending from it in July, is preliminary. The final budget and tax levy will be approved in October after equalized property values are set by the state.