Jordan school board to rethink tax hike
The Jordan Board of Education is taking a new look at next year's budget, probing for expenses to pare in the hope of avoiding a 40 percent tax hike.
"We got a loud and clear message last night," said Jordan board chairwoman Peggy Jo Kennett, referring to an emotional truth-in-taxation hearing Tuesday at Riverton High School that began at 7 p.m. and spilled into the early morning. "I hope people realize we were there to listen and that we are striving to be responsive."
At 1:30 a.m., after six hours of fiery testimony punctuated by thunderous applause and cat calls from irate property owners, the board tabled its tax proposal. They'll take it up again on Aug. 11, same time, same place.
The district still faces a $33 million shortfall. The culprits: $16 million in state budget cuts and plunging property tax revenue stemming from the Jordan District split. When Jordan's east-side communities voted to break from the district and form their own, Jordan lost 44 of its 84 schools and its rich property tax base.
Kennett said the board will explore "all options," including pay cuts, furloughs, volunteer labor, dipping into the district's "Rainy Day" fund and increasing class size.
She wouldn't guess where the board might be leaning, but said some tax increase is inevitable.
"How much it's going to be, I don't yet know," she said.
That may fly with some taxpayers who argued Tuesday for a more moderate increase.
"At least give us the appearance of discretion in spending," said Wendy Brown, a parent and district employee.
But others stand opposed to any hike, and vowed revenge at the polls during the next election.
"You're going to be sorry, believe me. Every one of you!" said Alexandra Eframo.
The political fallout may not end there.
South Jordan and West Jordan city leaders warn that if district officials don't heed taxpayer complaints, they could be headed for another split.
"It's not a threat," said South Jordan Mayor W. Kent Money. "It's up to the people, not me. I'm just saying it's a fear I have, and it's a realistic fear."
West Jordan was among the communities to consider breaking from Jordan, even taking it to a vote, which failed. The city is barred for four years from trying again to form its own school district.
But citizens could propose it as a ballot initiative, said West Jordan Mayor David Newton.
Jordan's proposed tax hike has been characterized as being anywhere from 25 and 40 percent -- depending on how it's calculated. By Newton's calculations, it's 33 percent.
"That's too high. We need to get it somewhere around 20 percent," said Newton. "The board needs to do everything it can and not just follow staff recommendations blindly."
Newton would like to see the district downsize in proportion to its now smaller size and dip into reserves. He suggests there are ways to curb spending, such as engaging more parents as volunteers and building less extravagant school buildings.
Board members contend they have made hard decisions, laying off 173 employees and tapping $6 million of the district's $14.5 million "rainy day" fund.
But Newton said the lion's share of laid off employees were bus drivers and custodial staff, many of whom landed jobs at the new Canyons School District. He questioned why the district retained all its supervisors in maintenance, transportation and nutrition.
"There may be a legitimate reason. But for me, it raises red flags," said Newton.
Kennett welcomes those suggestions, but said there are downsides to each.
The most severe shortage is in ongoing money for overhead, not buildings, she said. And depleting reserves is one-time fix that makes the district more vulnerable to looming budget cuts next year.
"This is a real hardship for taxpayers, one that has been forecast and talked about since people first started talking about a district split," said Kennett. "Where were [the citizens] a few years ago? Why weren't they talking to their legislators saying, 'Please don't do this. It will hurt us on the west side.' "
Here are Jordan District officials' answers to some commonly-asked questions about the proposed tax hike.
Q: Why don't you find places to trim like other districts? No one else is proposing a double-digit tax hike.
A: Nobody else has had a district split, except the Canyons and they have more money. No other districts in the state are raising taxes, other than those obligated to meet a countywide equalization requirement stemming from the split.
Q: Why not use $3 to $4 million you have in capital surplus to repay old bonds and lower the debt repayment portion of peoples' property taxes?
A: We will have to bond for new schools in the future. We hope to use the countywide equalization money and other tax money as part of a pay-as-you go strategy. Based on economics, that may not happen.
Q: You have a general fund surplus of about $176 million. Why not dip into that?
A: The only portion we can use is the Rainy Day Fund, which is $14.5 million. The Board is already using $6 million. All other amounts [of the general fund surplus] are reserved for specific line items, including retiree benefits. And it doesn't make a lot of sense to take one-time money to cover ongoing expenditures. Our monthly payroll is $17 million and we would not have enough in reserve to even cover one month of our payroll.
Q: Why not wait and see if the Legislature is willing to pony up money from its Rainy Day funds and $400 million education savings pool?
A: The state of Utah has told us there will be a minimum $700 million shortfall for this upcoming year.
Q: Are you raising taxes to sock it away, instead of tightening your belt?
A: No. The proposed tax increase is not our first resort, but one of our last. The proposed hike would net about $25 million, nearly $19 million of which would be spent plugging budget holes.