SPECIAL REPORT: UNEXPECTED PROPERTY TAX INCREASE CAPTURES PUBLIC ATTENTION

By Anne Scheck
Trammart News & Publishing
 
Recent Summary: November school board meeting draws taxpayer backlash testimony
 
When Central School District 13J approved a plan to pay ahead on its bond debt this past summer, there was a miscalculation on the burden to local property taxpayers, according to CSD 13J Superintendent Jennifer Kubista, who issued an apology about it earlier this month at the CSD 13J school board meeting. The decision resulted in increases on the current property tax bills for many, she acknowledged.
 
Several of those affected by the increase spoke at the school board meeting, including former Monmouth City Councilor Royal Johnson, who said he had lived in the area 50 years and considers the action unprecedented. His tax bill went up more than $200, he said. “I have always been for education,” Johnson stressed. However, the increase was done in a way that surprised everyone, he said. “You really did a bad job of public relations,” Johnson said, who credited Sen. Deb Patterson with helping him sort out the underlying reason.

The increase didn’t affect the district’s overall debt obligations, but it did significantly whittle down the amount on a bond of more than $5 million –  that undertaking appears to be within the authority of CSD 13J. However, resident Rich Graham told the board it looked “underhanded,” as a way to pay off one bond so that another one could be presented.

The CSD 13J Board formed a bond-development committee several months ago to determine the feasibility of bond financing for a long-range facilities plan that was approved this past year. Another resident who spoke at the meeting, Mary Hughes, reminded board members of the current economic climate, which has negatively impacted those on fixed incomes. The fact that there is now more to pay in taxes has made her “furious” with the school district, she said.

Apologies were made by both the superintendent and the board chair
District officials showed contrition for the tax increase. “We misunderstood how much this increase would be to the average taxpayer and we are sorry for that,” said Superintendent Kubista. CSD Board Chair Donn Wahl also apologized. “We are sorry for this,” he said. “We are all here working as hard and as well as we know how in order to guide and direct the school district.”

“This was a sound financial decision that was poorly communicated and poorly implemented, and we’ll take ownership for that,” he said. In the future such financial decisions will be “reviewed more closely and communicated more widely,” Wahl said.
 
An explanation of how the change was put into effect is posted
In information placed on the CSD 13J website, the district explained that each year Central School District’s budget committee, which is made up of local volunteers, approves the payment of debt service on bonds as one of its actions. “This year, when the committee approved the bond payments, they chose to pay off some of the debt from the bonds that built Ash Creek Elementary School and the Talmadge 6th grade wing remodel, which increased the levy amount on property taxpayers in the district for the '23-'24 year,” according to the district statement. “This strategy will reduce interest payments and decrease the overall obligation of the district in future years. This is not unlike reducing your interest by paying down the principal on a car or home loan.”

The cost of the pay-down has now been made more public
The bond buy-down -- the aim of the tax increase -- has an overall debt of about $5.45 million. The amount due on it this year is $1.24 million, with around $140,000 in interest, Superintendent Kubista explained. Because of the increased tax, an additional payment of over $2 million was made, to save future interest on the debt.
 
Updates have been shared on the CHS bond passed 15 years ago 
Payments on that bond, which was for remodeling, renovating and adding space to Central High School, “have been paused but will resume in 2028,” according to the district. The pay-off for that bond is scheduled for 2038.

There has been no effect from the levy for Polk Fire District No. 1
The Polk Fire District #1, which serves Independence and other areas, asked voters to approve an increase to the operating levy this past year that affected the tax rate. It did pass, but it won't get implemented until next year. This year it was the same rate of .19 per thousand.

The Oregon Department of Revenue has weighed in on the tax increase 
The Oregon Department of Revenue DOR’s statutory role in certifying local government taxes and supervising local budget law is minimal, according to Seiji Shiratori, policy director of the state’s policy tax division. “We review the certified taxes of more than 1,200 local governments annually to ensure they did not exceed their taxing authority,” he said.
  
Under Oregon law, the Oregon Department of Revenue is barred from any involvement in a local government’s fiscal policy. “However, we can construe local budget law when asked,” Shiratori stated.
 
“In this case, we are reviewing the Central School District 13J actions to confirm that they complied with the basic requirements of local budget law,” he said. The statement from Shiratori was provided by Rep. Paul Evans office, who also has taken an interest in the matter.

The Polk County Assessor provided some insight on tax processing
Valerie Patoine, Polk County’s tax assessor, fielded many calls -- and other forms of contact -- inquiring about the property tax increases. She referred many of them to CSD 13J due to the fact that the bonds themselves are out of her office’s purview. The County Assessor’s office only receives notices of assessments and doesn’t assign them.

Unanswered questions may require expert legal interpretation
Under the Oregon Revised Statute 328.260, the amount of the tax may be increased by an amount sufficient to retire any bonds that may be “callable." The school district bond is classified as “callable,” so under ORS 328.260, additional payments may be allowed, according to the seeming interpretation by CSD 13J. However, the extra money won’t retire the bond immediately, so there is some question as to whether it meets the terms of the statute, according to some outside authorities.

City responses haven’t directly addressed tax situation for residents
The Independence communications coordinator didn’t respond to multiple attempts seeking a response from city administration on the unexpected property tax hike to residents. Monmouth held a “coffee chat” on the property taxes this year at the Monmouth Senior Community Center, but Monmouth Mayor Cec Koontz referred almost all questions about the CSD 13J-related tax to the school district. Koontz, who said she identified herself as the school district’s finance director as well as mayor for attendees, was criticized by one who felt there could have been more information imparted about the recent increase.

How bonds work is now being more clearly understood
One benefit of the recent tax increase is that more residents have researched school bonds, as evidenced by interviews with those who say they have been impacted by the increase. In fact, school bond measures generally do not receive as much attention as candidate elections, according to Ballotpedia, an online political encyclopedia.

A public-school bond as typically undertaken to finance a building project or other capital project, and  “approved or defeated by the voting public,” Ballotpedia states.

One frequent objection voiced by community members is that they didn’t vote on the recent property tax increase. However, as Ballotpedia points out, state laws require ballot measures to be worded very specifically. So, although the property tax increase seemed to take many by surprise, the way the bond was enacted was by voter approval.  
 
The issue surfaced as the result of a resident who asked questions 
Many credit Andy Duncan, an Independence resident, as the first to identify the tax increase. Duncan decided this fall to find out the amount of his tax bill early in the season, so he stopped in at the Polk County Courthouse to do so. When he saw the jump – mostly due to educational bonds – he emailed many of his neighbors.

Tax charges are assigned at a rate per $1,000 of assessed home value. This year, an additional $1.30 on the school-bond payment apparently propelled the increase.

The district has issued a description of CSD items on the recent tax bill
On its website, the school district explains that there are two different line items on property tax bills: one for Central School District 13J, the other specifically for Central School District 13J bonds. The first is the portion that homeowners -- local property taxpayers -- contribute for classroom expenses and other educational services. That amount is less than 20% of the district’s general operating budget, according to CSD 13J. Since this rate is the same every year, any increases are due to the changes in the assessed property value, which is set by the Polk County’s Assessor’s Office.

The second item is the one that seems to have aroused objections by many property owners – it aims to pay off bond debt that created when the community approved bonds to pay for upgrades, like seismic improvements at buildings, as well as for new construction, such as Ash Creek Elementary School and the sixth-grade wing at Talmadge Middle School.