Over past seven years, school district tax rate has fallen 20 percent

Legislature deliberately shaves the levy to keep income at lower levels.

Most of Palm Beach County’s local governments have had the good fortune to keep their property tax rates steady in recent years, allowing them to bring in more money through rising home values without a formal vote to hike taxes.

But there’s a striking exception: the county’s public schools, whose tax rate has dropped 20 percent since 2011.

The school district is alone among the county’s large local governments in seeing such drastic cuts to its tax rate. The reductions have been great news for the county’s property owners, but they have made life far more difficult for the public schools.

In just the past three years, the school board’s total property tax rate has fallen from $7.51 per $1,000 of taxable value to $6.57 per $1,000 of taxable value.

That three-year drop means an estimated $181 million less in taxes that will be collected this year for the county’s public schools.

Reducing the district’s tax rate is a project of the Florida Legislature’s Republican leadership, notably House Speaker Richard Corcoran, who this year vowed not to raise school taxes at all, even “indirectly.”

The perennially falling tax rate is the driving force behind the school board’s decision to ask voters in November to approve a hike to a special portion of the district’s tax rate — the only portion of it that can be raised without state lawmakers’ approval.

Educators hope increasing the

tax rate this year will offset some — but not all — of the decline in the past seven years.

Doing so, they say, would allow education leaders to give subst antial rai ses to teachers whose pay scales have declined since the Great Recession and invest more in security and mental health programs.

“We ought to be able to benefifit from the (economic) recovery,” said Mike Burke, the school district’s chief fifinancial offifficer. “What we’re trying to do is restore and get back some of those reductions.”

But while the push for the tax hike has received considerable attention, the back story of the school district’s falling tax rate has received far less. Here’s a breakdown of what has been happening:

Who’s in control

While city and county governments have direct control over their own tax rates, Florida school districts largely do not.

School districts’ tax rates have three main components. The largest one — the “required local effort” — is set entirely by the Legislature. This year, it is $4.06 per $1,000 of taxable value.

School districts have a bit more control over two other parts of the tax rate — the exact amount of each one isn’t dictated directly by the state.

But those two rates are capped at relatively small amounts.

The “discretionary” millage can’t be higher than its current level of $0.75 per $1,000 of taxable value, and the “local capital improvement” millage can’t be higher than its current rate of $1.50 per $1,000 of taxable value.

So nearly all of the school district’s tax rate is either completely controlled by state lawmakers or capped at relatively low amounts.

The only exception is a fourth component, the “additional millage” that school districts can ask voters to approve by referendum every four years.

This is the one that the school district is asking voters to hike in November. It’s currently set at 25 cents per $ 1,000 of taxable value but, if voters approve, would rise to $ 1.

The ‘rollback’

The reason the tax rate keeps falling is simple: State lawmakers keep cutting the largest portion, the “required local effort.”

Legislators are doing so in an effort to “roll back” the tax rate. That is, to reduce the rate so that the school distric t collects the same amount of money each year even though property values rise.

Doing a full “rollback” has been a priority of Corcoran, R-Land O’Lakes, who in January vowed once more not to let school taxes rise through state inaction.

“We will not raise them directly,” he said in prepared remarks at the start of this year’s legislative session. “We will not raise them indirectly. We will not sit passively and allow the required local effort to be raised.

“When a taxpayer is forced to pay more money this year than last year, through no action of their own, it’s a tax increase.”

But while state lawmakers make a “complete rollback” a priority for public schools, it’s nearly unheard of for the county’s other local governments.

Doing so, after all, leaves no new money to give employees cost-of-living raises or account for the rising costs of goods and services they purchase.

In fact, it’s rare for the county’s municipal governments to lower their rates even slightly as property values rise.

To get a sense of how unusual this is in Palm Beach County, compare the school district’ s situation to the county’s largest cities.

West Palm Beach, Boca Raton and Palm Beach Gardens have held their main tax rates at the same level for the past few years.

The county government has held its property tax rate unchanged for eight consecutive years. This year, it is expected to bring in $52 million more than last year just by leaving its rate unchanged, thanks to new construction and the rising values of existing properties.

The school district does leave unchanged the portions of its tax rate that it controls. But that amounts to less than half its overall rate, meaning that the state’s mandate to “roll back” the largest portion guides most of its fate.

Being ‘held back’

The school district doesn’t depend just on property taxes to operate the public schools.

School districts also receive money from the state government, raised primarily through the sales tax.

The state uses the sales tax money to try to level the playing fifield among “rich” and “poor” counties. That is, the ones with deep tax bases and the ones without.

So districts that earn lots of property revenue from their wealthy tax base (such as Palm Beach County) receive less state sales tax money, and less-wealthy counties receive more.

As a result, all districts receive largely the same amount of per- student funding, although wealthier counties still pull in more money thanks to the portions of the tax rate that they control.

But regardless of the extra state dollars, lowering the property tax rate still means less money available for public schools.

“Why aren’t the schools in better shape financially? I’m not sure that everyone understands that piece, that we’re kind of being held back from the recovery,” Burke said.

In the past seven years, the school district’s tax rate has dropped by $1.62 per $1,000 of taxable value.

Since the November referendum would raise the tax rate by less than half that amount — 75 cents per $1,000 of taxable value — district administrators argue that it would merely restore some taxing ability that the district has lost in recent years.

Of course, to opponents of big government, a tax hike is a tax hike, however you frame it.

But the district’s falling rate means supporters can argue that the voter referendum would merely restore some of the stability enjoyed by virtually every other local government in the county.