Lack of school sales may raise Duluth property taxes

Talk about it

The Duluth School Board set its preliminary 2013 tax levy at the maximum level allowed by the state Monday night, meaning homeowners could see an increase of nearly 12 percent in the part of their property tax that goes to the school district.

The board will set the levy Dec. 18. Last year the schools levy brought in $25.8 million. If the maximum increase of 11.9 percent is approved in December, the district would get about $28.9 million, or a roughly $3 million increase.

The owner of a $150,000 home would pay $45 more a year in property taxes with such an increase.

In recent years taxpayers have seen annual levy increases in the 5 percent range. This year, 4.6 percent is the low-end option the School Board will consider. That’s how much of an increase the district needs to make its December transfer of $4.9 million from the general fund to its debt-service fund, which is part of the long-range facilities plan financial setup. The jump to 11.9 percent is necessary if the board decides to reduce how much money it takes from the general fund to pay off debt. The difference between the 4.6 percent increase and the 11.9 percent increase is $1.9 million.

The reason for the jump lies in the failure to sell buildings such as Central High School, Rockridge Elementary, Secondary Technical School and other properties. That revenue was meant to be a major source of construction debt payment. In its place, the dwindling fund balance has been used.

“Because we haven’t sold everything, we are driving the fund balance lower and lower,” said Bill Hanson, business services director for the Duluth school district. “It comes down to, are you going to sell them and when. It’s just a matter of when.”

The district will receive $1.5 million from developer Mark Lambert in 2013 for the second part of the Woodland Middle School sale, and that will help, Hanson said.

Superintendent Bill Gronseth said the district is aggressively marketing its properties.

“If we were to have these deals go through between now and the time of the vote, that could have a bearing on these numbers,” he said.

Setting the levy at the highest level gives the board flexibility to talk about reducing the transfer, Hanson said.

Board Chairwoman Ann Wasson said she appreciated having options.

“Looking at 11.9, it makes us all a little uncomfortable,” she said. “But it allows us time to see if we have sales of buildings or properties, it allows the public to hear about this and gives the opportunity to call us or talk to us and say, ‘I’m OK, I’m not OK.’ This isn’t in stone.”

Board member Art Johnston said he hoped substantial sales will reduce the general fund transfer, noting he was voting against the measure because it hadn’t been vetted before the meeting.

The measure was approved 5-1, with Johnston voting no. Member Mary Cameron was absent.

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