Error leads to 6% school tax hike

New Lebanon Junior-Senior High School. The district’s tax levy is estimated to increase 6% in 2021-22 due to a combination of fund balance applications and an error that caused the tax levy to be undercharged to property owners. File photo

NEW LEBANON — The tax levy in the New Lebanon school district will increase an estimated 6% in 2021-22 in the wake of an error committed in 2020, according to officials.

The district’s tax levy is capped at a 0.37% increase, according to the tax cap formula, but the district is asking for a 6% increase to make up for a shortfall in the budget and an error that led to underlevying last year’s taxes. Bills were undercharged and the levy decreased again, negatively impacting the tax cap for this year.

The district used $428,911 from its fund balance as revenue for the 2020-21 budget, which contributed to a $989,817 shortfall in the 2021-22 budget, according to District Superintendent Andrew Kourt. The district lost $382,000 in revenue by underlevying the voter-approved levy for 2020-21, described as a “tax error on billing” in Kourt’s April 14 budget presentation. The error affected the 2021-22 tax cap formula.

The 2020-21 approved tax levy of $8,492,589 was incorrectly levied at $8,110,335 due to the error, which resulted in residents seeing a decrease in school tax bills. The erroneously decreased tax levy was used as the prior year’s levy in the 2021-22 tax cap calculation.

Because it exceeded the tax cap, the district will require a supermajority, or 60% of voters, to pass its budget. Otherwise the district could see extra-curricular cuts.

A supermajority is required because the district is overriding its tax levy cap, according to Business Administrator Francis Rielly. The district would need to pass 50% to stay within the .37% cap.

The 6% hike is the first levy increase from the district since 2012.

The lower levy, along with a low-growth factor, created a maximum tax levy increase of $30,675, creating a revenue shortfall.

Kourt sent a letter to district residents in February about the error: “I write to inform you of a mistake that occurred in the collection of taxes from what was actually authorized and what was actually levied on each community member’s tax bill,” he wrote.

“During the 2020-2021 school year the New Lebanon Central School District was scheduled to collect a total of $8,492,589 in school taxes but instead $8,109,458 was collected. This has resulted in approximately 4.5% less taxes collected than was levied.”

New Lebanon’s tax levy has not increased since 2012, Business Administrator Francis Rielly said.

There was a reduction in taxes by a little more than 1% for the 2017-18 school year, he said. Last year would have been the district’s first increase in school taxes since 2012.

Kourt wrote in an April letter that the tax error will affect next year’s budget: “However, due to this error, the district has now depleted its remaining reserves and has little fund balance left to address our financial challenges,” he wrote. “Moreover, due to the state rules on tax caps, we must base next year’s tax cap calculation on the amount of taxes actually levied, instead of the amount approved by voters. Instead of starting our tax cap calculations with the correct amount, our starting point is once again reduced by $382,254.”

The proposed 6% tax levy increase is expected to bring $8,596,955 into the district. Along with the tax revenue, non-tax revenue of $287,000 and $3,238,633 of state aid will make the total district revenue $12,122,588, which balances the budget.

The budget breakdown includes $4 million for instruction, $1 million for special education, $3.6 million for benefits, $154,500 for technology, $762,629 for general support, $917,091 for operations and maintenance, $156,900 for co-curricular and athletics, $716,200 for transportation, $559,882 for debt service and $55,000 for interfund transfers.

The $11.8 million school renovation project completed in the fall, which was approved in May 2017, is “completely separate” from the annual school budget vote, Kourt said.

Each school year the district will have to pay interest and principal on the bond out of the school year’s budget, he added. Next year’s payments will be $371,000, Kourt said. A $5.59 million bond issued in August 2020 will last 15 years.

Kourt said Wednesday he is “cautiously optimistic” the budget will pass, emphasizing the need for people to get out and vote.

If the budget does not get supermajority approval May 18, the Board of Education will call a special meeting on May 19 or May 20 to assess the next steps, Kourt said.

The district can have a second chance to hold a vote for the proposed budget or the board can decide to reduce the tax levy increase. The district will have to have a 7-13 day public hearing period prior to a June 15 revote.

The decision is up to the board, Kourt said. But if the levy has to be cut, money will likely be slashed from athletic programs, some after-school activities and field trips.

“These are huge hits for the district,” Kourt said Wednesday. “This is what makes our district special and this is what our kids love.”

The proposed 2021-22 school budget reflects a 5.02% decrease from the 2020-2021 budget, according to the district. The 2020-21 adopted budget was $12,764,051 and the 2021-22 proposed budget is $12,122,588, a $641,463 difference.

The district’s budget reductions have included a full-time resource officer position, an assistant principal position, a teaching assistant, field trips, supplies and equipment, a business teacher, BOCES professional development and mechanic hours.

The district is not purchasing buses this year, which means the transportation budget line is lower, but it also cuts state aid for next year, Rielly said Wednesday.

District voters will decide on the budget May 18 and two school board positions at the New Lebanon Junior/Senior High School from noon to 9 p.m.

The budget vote is typically at the elementary school, but will be held at the high school this year because of COVID-19 restrictions, Kourt said.

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