Taxes and Capital Improvements

I have been following the WakeEd blog (from the Wake County News Observer); recently, T. Keung Hui posted noticed that the school board passed a resolution to ask for $939.9 million in funding. That’s right, $940 million.

I did some digging around to put things in perspective. First, I knew that Wake County was much larger than Champaign Unit 4 – like two orders of magnitude larger. Their 2012-2013 projected enrollment is 149,508. So I asked how such a large referendum ($810 million, not the full $940) translates to property tax increases, and Keung replied it is about $55 on a $100,000 home. Get this, Wake County (WCPS) has been passing bond referendums on a fairly regular schedule, its actually quite impressive:

Year $Million per $100,000
2000 500 34.13580247*
2004 564 38.50518519*
2006 970 66.22345679*
2013 810 55.3
total 2844 194.1644444

* Using the 2013 tax rate of $55.3 per $100,000 on a $810 million bond – these are not actual values. If you know them, please let me know.

 

With that money, they have built, on average, 14 new schools and renovated, on average, 21 schools per referendum. Or for a total of 42 new schools and 62 renovated schools, prior to 2013. Wow! And that cost $139 per $100,000 in property taxes (again, subtracting out the 2013 value). Not too shabby.

In comparison, Unit 4 wants $180 per $100,000 in 2014 and another $70 in 2018. The working cash bond of 2012 works out to roughly $16.67 per $100,000. There is already controversy about the 2014 referendum; there is even not much consensus on what direction to head in.

The point of this post is to look at other school districts and see how they do capital improvements. I just happened to watch WCPS because they are tied up with Alves “Controlled Choice” thing as well, just played out on a much larger scale. I wonder what other school districts are doing. How do they get to the point that they can pass referendums every so often, backed by a well-thought out plan?

Sources:

Advertisements

11 Responses to “Taxes and Capital Improvements”

  1. charlesdschultz Says:

    FYI – I used a flat rate to determine the previous years of property tax increases for the WCPS referendums. I did not actually find the raw values for tax increases, so they may be off. Sorry, I should have noted that originally.

  2. Jackie Says:

    I have no idea whether it would be a relevant analysis in this particular instance, but it is important to understand that state funding formulas vary widely from state to state. Hence, the proportion of the burden on the local district also varies. I found an old figure (1996-97) that suggested about 69% of a district operating budget in NC comes directly from state funds and that state funds support entirely a “basic” level of funding, certain guaranteed teaching positions, etc. Among the 50 states, state support in NC is among the highest. Illinois is the lowest. While funding formulas are complex and I don’t have time at the moment to sort it out, I’m guessing it is a reasonable assumption that n Illinois district probably must shoulder much more of the burden for facilities and operations than local districts in many other states. We need to compare apples to apples . . .
    Illinois’s school funding formula is considered a “joke” and one of the worst in the country. Take a look at some of the resources here: http://nces.ed.gov/edfin/

  3. pattsi Says:

    This could be interesting information if there was any reason to compare Wake County, NC and the city of Champaign school district other than Alves. Here is the wikipedia info about this county

    https://en.wikipedia.org/wiki/Wake_County,_North_Carolina

    Quotes about the county “Wake County, North Carolina is consistently rated as one of the best places to live and work in America.”

    “Wake County School System The second largest system in the state.”

    Plus this county is part of the NC research triangle.

    A concerned citizen’s web site focusing on the county http://www.wakeupwakecounty.org/

    I agree that it is always appropriate to see and learn what other parts of the county do/accomplish, but in doing so it is also important to frame the comparisons.

  4. charlesdschultz Says:

    Good points by Jackie and Pattsi, thanks. I did not realize the funding formula was so different – that certainly alters the picture a bit.

    So…. are we all going to move to NC now? Did this turn into an advert? 🙂

  5. pattsi Says:

    In addition to Jackie’s posting, again and again and again I remind folks as to the financial burden put on all taxing bodies by TIF districts. In addition, the rest of the state of Illinois is put into the position due to state formulae and TIF to support Chicago schools, adding to our local burden. Since there a virtually no postings on this blog related to TIF and what this might have burdened Unit 4 and the taxpayers, I assume no one thinks this has a true consequence.

  6. charlesdschultz Says:

    Pattsi, I accept your challenge and will do a post on TIF. It will be a research project to find facts and numbers, and then an attempt to make a picture/chart out of it (visualization).

    However, I already know one big problem I am going to have. How do I answer the “so what” question? Most TIFs have, what, 25-year lifespans? I do not know of a way to eradicate a TIF. I believe, based on what little I have read so far, that they are horribly abused, but how do I get over the fact that the milk is already spilled? If you could address that, it would help provide incentive. And I don’t want the theory – I want actionable steps that will lead to change.

    I know you like to use the John Street project as a glowing example of how to affect change. I agree, that is an awesome example. However, people like me feel like we don’t have what it takes to make that kind of stuff happen. But if I am capable of affecting such change…. well, that would be totally so cool! 🙂 What do I have to do?

    • charlesdschultz Says:

      As an update, I have spoken to Matt Foster of Unit 4, TJ Blakeman with the City of Champaign, Dick Helton of the Village of Savoy, Patricia Kirby of the Village of Bondville (who totally turned her nose up at me) and Gordy Hulten (Champaign County Clerk, since Bondville was not helpful). Mr. Foster is burning through vacation days and has a couple things in the oven – I expect to hear more from him next week. TJ was awesome; very informative, very helpful and even generated a new chart to help me learn about TIFs in Champaign, which I will post later when I get my blog post finalized. Dick Helton and Gordy were also very helpful and I have information from them. Basically, Champaign has three TIF districts, Savoy has two, Bondville has zero. The big question I have come up against is “Could economic development have happened IN ANY OTHER WAY without the use of TIF?” It’s a big unknown – maybe, maybe not. Some will argue that it probably could have.

      But I’ll go into deeper detail after hearing back from Mr. Foster.

      • pattsi Says:

        Actually whether development might have happened without an tax incentive is not as difficult to ascertain as Mr. Schultz purports. A bit of historical digging will turn up sufficient data as to the plans of a business that is then given an added leg up via some form of economic incentive, aka TIF. Here is a paper addressing this variable. A search via the internet yields many other sources that focus on whether a development would have happened sans economic incentives.

        http://www.lincolninst.edu/pubs/1078_Tax-Increment-Financing

  7. pattsi Says:

    O.K. first look at 20 years of property values of the buildings within a TIF district before established as a district. Run a regression analysis to see how much the property value may or may not increase during the window of time for the TIF district. This produces one curve on the X Y axis where X is years and Y is property value. Next get the property values of those within a district from the time the district is established until now. Some districts have been established long enough for sufficient data and if there is not enough run another regression analysis to get to the 25 year mark. (Caveat–I think the time length of districts was changed after the original law was passed from 20 years to 25 years–but double check this information.) The second set of data creates a second curve. It is the differential between the second and first curve that shows the increase in property value not the difference of the baseline property value against what has occurred within a district. Unfortunately city planners argue the latter approach. Then multiply the school district tax rate against the values and subtract and add. Remember the property values get frozen at year zero,This will give the amount of total monies lost and amount that would have come to Unit 4 without a TIF.

    Of course, you could always call Ben Javorsky at the Chicago Reader. That would be an adventure.

    Here is a great study http://www.marylandpirg.org/sites/pirg/files/reports/Tax-Increment-Financing-vMD.pdf

    Paper by Greg Leroy http://www.goodjobsfirst.org/sites/default/files/docs/pdf/apa.pdf

    JSW took 8 people with determination. Now I am going back to the two-levels of approaches used toward the cessation of smoking–one was teaching school children about the problems using educational means they could understand and two was on the federal level of changing laws, medical implications, etc. Many argue that the tipping point was reached when children started to ask adults “why are you smoking.” I recently sent you two web sites that contain materials for teaching children 8-18 about cities, why they work, how to design, what to think about related to open spaces, etc. Grab those and work toward getting such into the Unit 4 curriculum Here are the web sites again.

    http://citiesandschools.berkeley.edu/yplan.html

    http://www.cubekc.org/

    I actually have 2 more, but I will stop with these two.

  8. charlesdschultz Says:

    Just curious, why not simply gather the tax increment information itself, instead of trying to find property values back 25+ years? Also, getting property values for 20 years prior to the TIF for all properties within the TIF would take some serious coordination with other resources.

    There is a huge unknown (and hence, an assumption) that I cannot account for – the “what if” game. If there was no TIF, how do we know what the property values would have been? How do we know what businesses would or would not have been established? I agree, TIF as it stands seems like a cheap shot to collect taxpayer monies and fork them over to private businesses. But a linear regression to determine “lost” tax revenues seems like fuzzy science to me.

    Guess I’ll start my “why are you TIFfin” campaign. The kids will love it. 🙂

  9. pattsi Says:

    My response is that there is plenty written about the fact that most of the claimed TIF related development or like kind economic development probably would have occurred using other means of incentivising economic development and not punished all the other taxing bodies. I gave you an excellent 9 page resource in the above post. I have mentioned Greg Leroy’s book, The Great American Jobs Scam, many, many times. Both of these cover the issue of assumptions and “what if.” Of course assumptions are part of the protocol. And the reason for running the first suggested regression is to find out the natural progression of property value over time sans any economic incentives.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: