School district to collect $2.4 million more in ad valorem taxes over last year

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School district to collect $2.4 million more in ad valorem taxes over last year

August 02, 2017 - 09:56

Tentative millage rate presentation, HCSD, July 25, 2017

Joyce McIntyre, the school district’s Director of Financing and Purchasing began her presentation on the school district’s tentative millage rate by pointing out that the state has reduced their Required Local Effort over last year’s rate.

Florida Tax Watch describes Required Local Effort (RLE),

“The Required Local Effort (RLE) is the amount of funding that each district provides annually toward the cost of the Florida Education Finance Program (FEFP) for grades K-12. Each local school district generates its RLE by levying a state- approved millage rate on ad valorem property within the district. The aggregate RLE for all school districts is prescribed by the legislature as a specific line item in the annual general appropriations act. The RLE, combined with the net state FEFP, makes up the gross state and local FEFP funding total.”

According to Florida Tax Watch, the RLE is allocated in the following way.

“In July of each year, the Florida Department of Revenue sends to the Commissioner of Education a certified estimate of the taxable value of all property within each school district and the total for all school districts within the state. The commissioner then calculates a millage rate that, when applied to 96 percent of the estimated state total taxable property value, would generate the prescribed aggregate required local effort for that year for all districts.

Tentative millage rate presentation, HCSD, July 25, 2017: “2017-2018 Tax Revenues Generated from Proposed Tentative Millage Rate”

“The commissioner also certifies this millage rate to each district’s school board as the minimum rate necessary to generate the required local effort.”

If the school district chooses not to levy the tax, then they are essentially opting out of the Florida Education Finance Program funding estimated at $98 million.
Joyce McIntyre explained during the first public hearing to adopt the tentative millage rate, “The RLE decreased from the previous year. We advertised a notice of tax increase. This is because the amount of ad valorem tax to be levied is greater than the amount raised last year, which makes the rolled back rate positive. Even though the RLE millage has been decreased from the 4.621 down to 4.371, it’s considered a tax increase due to the substantial increase in the estimated tax roll,” said McIntyre.

It should be noted that governing bodies have the ability to adjust the millage rate down, in order to match the previous year’s tax rate due to an increase in taxable values. This is called the rolled-back rate. The Hernando County School District chose not to do that.

The 6.619 millage rate will generate $2.4 million more than last year, based on a 96% collection rate.

Joyce McIntyre presented a chart comparing the 2017 and 2018 school taxes of homes valued between $75,000 and $200,000, which showed that taxes would be decreased from what property owners paid last year. (See Chart entitled Property Tax Rate on a Residential Home to the right.)

Mark Johnson wished for clarification on a decrease on school taxes for homes worth $75,000 - $200,000. McIntyre responded that the taxes will be decreased. This is slightly misleading since home values increased. A home worth $75,000 last year may be worth $90,000 this year. The chart ignores that property values increased and that was why they were able to reduce the millage. Even though the millage is less, they are collecting more money.

Tentative millage rate presentation, HCSD, July 25, 2017: “Property Tax Rate on a Residential Home.”  The chart does not account for an increase in property values, therefore the chart cannot accurately compare the tax rate of a single home because the chart assumes the value remained the same. Most likely the value of the home  increased due to an increase in property values across the board.

Anthony Palmieri of Spring Hill stated that collecting $2.4 million in taxes more than last year is an increase in taxes. “I don’t buy your reasoning of lower tax,” he said.
He also discussed the continuation of the 1.5 mil capital outlay tax. “You are already getting $2.4 million more than what you got last year. You’re getting money from the state. You’re getting the half cent tax… plus you have many grants that you can apply for. There is a limit as to what you can tax the people and I think you should do away with the 1.5 mil capital outlay for this coming year.”

The tentative millage rate of 6.619 was adopted unanimously by the school board.