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Something to think about...by Superintendent Westerberg

You may have heard enrollment in Big Lake Schools is 84 students greater than the district expected. It’s an understatement to say this is great news for a district having suffered through many years of declining enrollment and sometimes drastic budget cuts.

District Finance Director Angie Manuel recently shared with the school board the proposed property tax levy for the 2020-21 school year. The proposed tax increase is 7.5%. That’s a significant increase, however, I will explain what that really means.  

The state of Minnesota provides about 84% of the funding for the district’s general operating fund while local property taxes cover about 12% and the federal government and other entities make up the rest. The state also provides additional funding to school districts having lower property values. Low property values are generally a result of a small commercial and industrial property base, which is taxed at a higher rate than residential property. For years, Big Lake was a district of low property value compared to other Minnesota school districts. Therefore, the state provided additional funds to the school to help ease the property tax burden. The state calls this equalization funding.

During the last two years, the value of the property tax base in the Big Lake School District has grown significantly. Two years ago, the increase was 9% while last year there was a 10% increase. The state average was 5%. Due to the increase in value, Big Lake is no longer considered a property poor district and the state is no longer providing equalization funds to lower the property tax burden. Unfortunately, the loss of revenue from the state means the difference is made up by the local property owners.

Now back to the 7.5% property tax levy increase. Only 1.5% ($161,864) is an increase of revenue to the school district with the remaining 6% ($571,183) increase due to the loss of state equalization aid.

Senator Mary Kiffmeyer has been a champion of equalization for those districts, like Big Lake, having a greater tax burden. She has introduced legislation to expand equalization for schools like Big Lake. I thank Mary for her efforts.

It’s great to see the number of new homes and businesses over the last few years that contributed to the expansion of the tax base.   Spreading taxes across more and higher valuations helps all property owners. Whether your taxes will increase for the 2020-21 school year will depend on the assessed value of your property. Those with little or no increase in property value will see little or no increase in property taxes. Those having a significant increase in property values will likely see some increased taxes. Whichever is your situation, it’s always best to have more people paying into the system that provides services to the public.