Unsold schools likely to force Duluth tax hike

Duluth School Board members appear resigned to approving an 11.9 percent increase in school property taxes in December.

The higher-than-average increase is meant to pay off debt related to the long-range facilities plan, beyond what the school district previously told taxpayers they would pay for the plan. A lack of property sales, including Central High School and Rockridge Elementary School, is one of the reasons for the probable increase.

“While we’re having a tax impact greater than projected now, it would be offset in the future,” said Bill Hanson, business services director for the Duluth school district, speaking to School Board members at a committee meeting Wednesday. “And it does not provide any impact to the operating budget.”

The board will set its 2013 tax levy Dec. 18. It set the preliminary levy at the maximum level, which is 11.9 percent, in October. If approved the district would get $28.9 million, or a $3 million increase. The owner of a $150,000 home would pay an additional $45 a year in school property taxes.

The 11.9 percent increase would allow a transfer of $1.9 million from the general fund to the debt service fund. About $4.8 million is transferred annually, and that money has been coming from the fund reserve, which last December had been drawn down to $6.8 million. It likely now sits at less than $5 million. The reserve will receive $1.5 million in 2013 from the sale of Woodland Middle School.

Board member Judy Seliga-Punyko said approval of the increase is “necessary.”

“They are working on the sale of properties,” she said. “It will come right back once we sell them.”

Hanson said revenue from the sale of schools and land will go to replenish the fund reserve.

“As the properties sell,” he said, “the situation will come back into balance.”

Member Art Johnston said he’s heard from constituents who are worried about rising taxes.

“They are worried about the impact and their ability to pay,” he said.

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