NEW LEBANON — Property owners in the New Lebanon Central School District could see a 6% tax levy increase, the first tax hike in nine years.
A $989,817 budget deficit was caused by the loss of $382,000 from under-levying the 2020-21 school taxes and $428,911 from the use of the budget’s fund balance. The remaining $178,906 deficit is the result of regular budget increases, such as salary and benefit costs, according to Business Administrator Francis Reilly.
The budget deficit is the difference from the 2020-21 school year to the 2021-22 school year, he said.
The district is seeking an $8,596,955 total tax levy for 2021-22, which is $486,620, or 6%, higher than the 2020-21 school year, he said.
The proposed 2021-22 school budget reflects a 5.02% decrease from the 2020-2021 school year budget, according to the district. The 2020-2021 adopted budget was $12,764,051 and the 2021-2022 proposed budget is $12,122,588, a $641,463 difference.
The district will host a public hearing on the proposed budget May 5 at the Walter B. Howard Elementary School. District voters will decide on the budget and the Board of Education on May 18 at the New Lebanon Junior/Senior High School.
The budget vote is typically at the elementary school, but had to be at the high school this year because of COVID-19 restrictions, District Superintendent Andrew Kourt said.
The district used $428,911 from the fund balance as revenue for the 2020-21 budget, which contributed to a $989,817 shortfall in the 2021-22 budget, according to Kourt.
The district lost $382,000 in revenue by under-levying 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 2020-2021 approved tax levy of $8,492,589 was actually 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 levy in the 2021-22 year’s tax cap calculation.
The lower levy, along with a low-growth factor, created a maximum tax levy increase of $30,675, creating a revenue shortfall. To close the gap, the district is recommending a 6% increase in the tax levy.
But since the maximum tax levy according to the state’s Tax Cap Law is $30,675, 60% of school district voters need to approve the 6% levy increase, according to Reilly.
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.”
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 district ended the fiscal year below the comptroller’s recommendation of a 4% unrestricted fund balance, Kourt said in a budget presentation last week.
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 $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 Tuesday.
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.