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January 27, 2014

Local school districts take hit as Logan County lowers property taxes

EDMOND — Logan County Assessor Tisha Hampton who took office in 2011 recently lowered the Logan County property tax from 12 percent to 11 percent. With the reduction of the property tax, residents will see an 8 percent reduction in the base property tax beginning Jan. 1.

Logan County includes not only the Guthrie School District but also Edmond and Deer Creek school districts as well as some smaller districts in the county. The district hit the hardest with the lowering of ad valorem taxes will be the Guthrie School District.

Although Guthrie residents will see a yearly savings, the Guthrie superintendent says the lowering of the tax puts the building of an elementary school and replacement of another off the planning board because the bondability of the district is now too low to cover the cost of construction of the schools.

“We project we will be losing $407,000 in our general and building funds,” said Superintendent Mike Simpson. “It also reduces our bonding capacity from $13 million to $11.8 million. That is the maximum we can bond for based on total net evaluation.”

Simpson said the loss in revenue will not be offset by state funds and the district will have to absorb the loss.

“The notion that the increased ad valorem will offset the loss is not true of our district,” Simpson said. “Growth is 100 percent chargeable because of state aid. Generally it works out to a one-for-one chargeable.”

Simpson added Guthrie School District’s budget runs about $23 million, and although it looks like a small percentage, 87 percent of the district’s income is tied up in personnel and related expenses.

“The decrease will affect the hiring of personnel in our district,” Simpson said. “Guthrie pays the lowest percentage of its budget for personnel than any district I have worked in.

“The 13 percent left is fixed costs including electricity, natural gas and gasoline for the buses.”

The district has no sinking fund because it does not have any outstanding bonds. “Our last bond was passed in 2006,” Simpson added.

In his second year as Guthrie’s superintendent, Simpson said a committee of community members has been prioritizing needs.

“We need to build a new elementary and replace an existing one,” Simpson said. “We have hired an architect and have formed a bond council. “What we have prepared for in the last 10 months is not going to come to pass. We planned our needs based on a $13 million bond and any less will not cover what we need.”

What it means financially for Guthrie residents living in the Guthrie School District is a savings of about $125 a year. For homeowners living in a house valued at $150,000, who claim homestead exemption, they will see a decrease from $1,297 to $1,183 a year.

For districts already financially strapped, the property tax reduction will affect the general and building funds in the three largest districts to a tune of more than $724,000.

The Logan County assessor’s tax break will cost Edmond schools more than $200,000, said Lori Smith, Edmond’s chief financial officer.

“We will see a loss of $255,224 in our general fund and building fund,” Smith said. “This is a loss in revenue for the district, but hopefully growth in property valuation will serve to offset the loss of funds.”

Operating funds come from general fund taxes and state aid.

“My first notice was Dec. 23 when we were out of school,” said Deer Creek Superintendent Ranet Tippens. Deer Creek did not return to school until Jan. 8.

“Everyone in Logan County will experience about a 1/2 mill increase to pay off existing bonds. While the value of the house will be lower, the actual tax rate went up.”

Deer Creek will lose $74,704 in General funds, which equates to the employment of two teachers, and Deer Creek will lose $10,672 in their building fund, Tippens said.   

“This will only increase the problems of rising class sizes and increasing deferred maintenance,” Tippens said.

She went on to say studies also show a clear correlation between student test scores and state per pupil funding.

“Tulsa’s news channel 6 just ran a story on K-12 achievement and Oklahoma ranked 8th lowest in the nation in per pupil funding,” Tippens said. “Other reports rank Oklahoma in the bottom three in per pupil funding.

“Now the Logan County Assessor (without consulting a single educator or other entities that would be affected) has single handedly reduced that even further.   

“In saving each tax payer a few dollars, children who have no voice lost.”

Logan County also includes school districts in Crescent, Coyle, Mulhall and Orlando.

At 11 percent, the reduction brings Logan County’s real property assessment ratio in line with the neighboring counties including the surrounding counties of Payne, Lincoln, Kingfisher and 35 other Oklahoma counties, Hampton said.

“It wasn’t right for Logan County residents to pay more for exactly the same service for which their neighbors across the county line paid less,” Hampton said. “By lowering taxes, we do right for current residents and stop the policy of punishing those who choose to move to Logan County from neighboring counties.”

In 1996 Oklahoma voters approved State Question 675. This initiative put a cap of 13.5 percent and a floor of 11 percent on the taxable percentage of property. This effectively froze Logan County’s assessment at its then-current ratio of 12 percent.

Earlier this year, Hampton determined that subject to the guidelines of SQ 675, she had the authority to lower the rate to 11 percent.  

“I spoke to Guthrie Superintendent Mike Simpson prior to my decision,” Hampton said. “To this day, neither he or any other government official has expressed opposition to the plan. I held a meeting with numerous local government officials and I asked them if any of them opposed the reduction. Not a single one of them said that they did.”

Supt. Simpson said that he first spoke with Hampton about the tax break on Oct. 31.

“I asked her to keep us in the loop because it would affect the school district,”  Simpson said. “The next time I heard anything about it was when I received two letters on Jan. 6, after returning from the break.”

 Simpson said the first letter postmarked Dec. 23 told of the consideration for lowering the tax rate and the second letter was a press release dated Dec. 31 telling the tax rate had been lowered.

Both letters were received while the school district’s office were closed.

“Her rationale was to equalize taxes in surrounding counties,”  Simpson said. “My objection was in not allowing us to prepare.”

Simpson said after receiving the press release sent Dec. 31, he asked Hampton if any considerations were made for bonding capacity and she said no.

“I offered our assistant superintendent to work with her on the numbers, and I told her I would gladly lend her his expertise but it (the tax) was already lowered.”

Hampton said she became aware of both the discrepancy and her ability to lower the rate through interactions with state tax officials.

Hampton becomes the first County Assessor in Oklahoma to lower an assessment ratio since the state question was approved in 1996. Once lowered, the rate may only be increased through a vote of the people.

Taxpayers will notice the new lower rates on tax assessments to be issued later this spring.

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Anthony Morales, an Edmond Memorial alum, inked with the Carolina Panthers Thursday morning. He is shown here playing for Weber State University.

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