The 2% School Budget Tax Cap includes the following provisions:
> A school district's tax levy limit, excluding the taxes necessary to support the local share of capital expenditures, could increase by up to the lesser of two percent or the annual increase in the consumer price index ("CPI");
> A school district would be allowed to carry over unused tax levy capacity from the prior year, but could use this carryover levy capacity to increase its tax levy only an additional 1.5% in any year; and
> In the event a district's actual tax levy exceeds its authorized levy due to clerical or technical errors, the erroneous excess levy must be placed in reserve to offset the levy for the next school year.
> A school district would be required to submit a tax levy proposition for approval by voters at the district's annual meeting on the 3rd Tuesday in May. If the proposed tax levy is within the district's tax levy limit, then a majority vote would be required for approval. If the proposed tax levy exceeds the district's tax levy limit, then the vote threshold required for approval would be 60 percent.
> If the tax levy proposition is defeated, then the district would be required to submit a second levy proposition for approval, which complies with its tax levy base, by voters at a district meeting held on the 3rd Tuesday in June. If the proposed tax levy is within the district's tax levy limit, then a majority vote would be required for approval. If the proposed tax levy exceeds the district's tax levy limit, then the vote threshold required for approval would be 60 percent.
> If the second proposition is defeated, then the district would be required to adopt a tax levy that is no greater than the prior school year.
Tax Cap Law Basics
What does it mean to be considered ‘within the cap’? Aren’t voters still going to decide on school budgets either way?
• Yes, voters will still decide on budgets. Therefore, the cap itself might be more accurately described as the figure that determines what level of voter support is needed for a budget to pass. If the budget carries a tax levy above the figure resulting from the cap calculation as described above, a supermajority (60 percent) of voters is required for budget passage. If the tax levy included with a proposed budget is within the calculated figure, a simple majority is needed to pass the budget.
• Note: Districts are not required to propose budgets that carry tax levy increases at the maximum allowed under the calculation. This calculated figure simply represents the maximum tax levy increase that districts can propose without triggering the need for supermajority support.
What other elements of the law will affect school budgets and taxpayers?
• School districts may "bank" unused portions of their cap (up to 1.5%) for subsequent years. Again, this really refers to what might be added to the tax levy without requiring a supermajority for passage.
• Similar to current law, school districts can hold up to two budget votes under the tax cap law. If two budget votes are defeated, districts would be prohibited from increasing the tax levy from the previous year.
• Voter-approved capital construction projects are exempted from the cap on a dollar-for-dollar basis. Because the debt payments for previous district capital construction project are now staying relatively flat, it is unclear if this exemption would apply.
• As a final note, the tax cap applies to a district’s tax levy, which is different from tax rates. Tax rate increases can be different from the tax levy increase due to changing assessment levels as determined by the state. Therefore, the establishment of this tax cap does not mean that individual property owners’ tax bills will necessarily be capped in the same way as the tax levy. The district does not control this. |