June 04, 2014 - In order to meet the requirements of a new state law forcing school districts to repay borrowed money from the state quicker, Oxford taxpayers will see a 0.9-mill increase in their tax bills.
Last week, the Oxford School Board voted 6-0 to increase the debt tax from the current 7 mills to 7.9 mills.
Trustee Angela Mitchell was absent.
Public Act 437, passed in 2012, mandates that schools pay off loans from the state within six years of paying off bonds. For Oxford, the "Mandatory Loan Repayment Date" (MLRD) is 2037, but because the current 7.0 mills will not meet the required repayment date, there is a need for this increase.
However, the law also states that "the increase may be limited to the average decrease in taxable value over the last five years. In this case, the debt payments may be extended past the MLRD."
According to Assistant Superintendent of Business & Finance Pamela Anstey, the district's total taxable value decreased by 12.81 percent.
In 2009, the taxable value was $1,066,906,321. In 2014, it's $930,261,900. The decrease is the equivalent to 0.9 mills.
"This is the minimum we can raise it to be compliant (with the law)," Anstey said. "What the problem is – and why the state is reacting – is all the declining assessments are not generating the revenue so it's being a bigger and bigger burden on the school bond loan fund that they (the state) can't bare putting the brakes on and saying 'we need to get compliant and we need to be able pay this off and know that we can.'"
"I think if we hadn't gone through the recession since 2009, everyone would have just gone on and thought things were fine," she continued. "I think it's catching up with everybody, so they said 'have a goal in mind of when you're going to repay.'"
Under the 7.9 mills, the existing $117,295,000 debt is scheduled to be paid off in the 2038-2039 fiscal year, while the $33 million bond passed by voters in 2009 is expected to be paid off in the 2042-2043 fiscal year.
Even at 7.9 mills, Anstey said homeowners will be paying less in taxes then they did in 2009. In 2009, a homeowner with a $200,000 home and taxable value of $100,000 would have paid $700 in taxes, but the same home in 2014, now valued at $87,190 at 7.9 millage rate would pay $688.80.
Board Vice President Carol Mitchell asked what happens if property values continue to rise and home values in Oxford continue to increase.
"On an annual basis we'll review (the millage)," Anstey said. "We'll take the five-year average and it could potentially go down if you want to keep extending (the payment date)."
Superintendent Dr. William Skilling said even if they reached a point where they could reduce the millage rate, because of increased taxable value and population growth, he said if the board chose to freeze the current 7.9 rate, they would be able to pay off the debt sooner.
Anstey had also proposed two other options to the board. The first would have been to raise the debt tax from 7 mills to 9.68 mills, which would have allowed the schools to pay off the bond by 2037-2038. The second was to raise the millage to 22.91 mills, which would have met the school's payment obligations and not required having to borrow from the state to make payments.
"If we could it would be great to raise it to 22.91 (mills) and pay your debt and not borrow from the school bond loan, but I don't think that's feasible or anyone really wants to take that one," Anstey said. "(Raising the millage rate) is not something we have a choice on, the board had to act and they took the minimum (increase) to protect the taxpayers as much as we could. The hope is the taxable value will continue to increase, so we can pay it off faster and we could potentially meet our required deadline."
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.