Budget time for local governments has just passed. This year we’ve received more than the average inquiries about city, school and county budget matters.
Our first response is always this: We don’t set budgets, we just send people to budget meetings and try to figure out a way to explain them that makes sense to our readers. It’s one thing to say tax levies are going up and down, which is what most papers our size do. It’s another to say why.
One year we feel we have a good grasp for a local government’s budget, the next year something changes and back to budget school we go.
Most, but not all of the questions raised are about the school budget. From talking to others in the weekly newspaper business elsewhere, it’s the same story. No one likes taxes, and the local government that collects the most local tax dollars is going to have the biggest target on its back. And that would be the school.
None of this is meant to defend or be critical of any school, county or city budget. The boards of education, city councils and county boards are elected by you, the citizens, and if a budget or tax request is to be defended, it’s their jobs to do so. But it is also your job to direct your questions to them.
One thing we can tell you is, that when you compare a city budget to a school budget, or a school budget to a county budget, or a county budget to a city budget, etc., you aren’t comparing apples to apples, so don’t go there.
You also aren’t comparing apples to apples when you compare one school’s budget to another school, one county’s budget to another county, etc.
When looking at budgets, also keep in mind that the only local source of revenue for public schools is property tax. Counties also get the bulk of their operating money from property taxes, but they also have inheritance taxes to pull from if needed. Remember last year, when Cuming County used $529,500 from its inheritance tax fund to offset a tax levy hike? Had the board passed the same budget without the $529,500 in transfers, the 2012-2013 county property tax levy would have grown to 19.77 cents rather than been cut a half-cent or so, even with the valuation hike.
The inheritance tax is a local tax, and the county has about $3.8 million of those tax dollars in its budget. So when one compares a county budget’s tax request to a school’s tax request, the annual inheritance tax revenue should actually be added to see what local money is actually available to spend. The inheritance tax figure does show up in the published budget document, but not as a tax request.
Cities and villages also levy property taxes as a source of income. But in West Point’s case, the city also pulls in some money for its general fund from what residents pay for utilities. This year, for example, on top of the property tax the city will collect for its general fund, the city will also transfer $382,000 from its various utilities to the general fund. And then there is the local option sales tax, which every municipality in the county is now collecting. This year, the sales tax will generate another $850,000 or so in taxes for West Point to work with.
We’re definitely not advocating this, but just throwing it out: If the local school had an inheritance tax fund from which to pull $500,000 to lower its levy and another $250,000 from a half-cent sales tax, it could have dropped its levy 8.5 cents.
A lot of this won’t stop the cry for lower taxes, and none of it is meant to do that. It’s just meant to show that when you talk taxes, there are taxes and then there are taxes.