Lincoln Public Schools is planning its biggest property tax levy drop in more than 20 years, but Lincoln residents will likely see their property taxes go up under the proposed 2023-2024 budget now being considered by the Board of Education.
That seeming contradiction is the result of multiple factors, starting with the 22% average increase in property values across the city. That means that even though LPS will cut its levy for general operations and bond debt repayment from $1.21 per $100 of valuation to $1.08, a nearly 11% drop, it will still take in some $27 million more in property tax revenue this year.
Some of that increased revenue is required because of changes in how the state funds public education, the second major factor that will impact LPS budgeting and thereby property taxes going forward for years.
State aid to LPS under the equalization formula is expected to drop by some $25 million in the next budget cycle, forcing the district to prepare for the drop by accumulating funds this year that can be used to make up for state aid that equalized districts, like LPS, receive under the old formula.
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While total state spending is up, thanks to a projected $24.6 million in special-education funding, LPS’s aid from the equalization formula will drop by about $10 million from last year and is down about $38 million from the 2018-2019 school year.
So, all in, LPS will receive about $15 million more in state funding than last year and $27 million more in property tax revenue under the proposed budget. That allows the lower levy, which equates to $39 million less than if it had been kept at this year’s rate while providing the $18.5 million in surplus revenue for future budgetary needs.
For property owners of an average home in Lincoln, valued at $228,000, the bottom line of those calculations is this: If their valuation increases by 24%, the LPS property tax take will go up by about $320, despite the levy decrease.
About 60% of a Lincoln resident’s property tax bill goes to LPS. So the full property tax impact of the increased valuations can only be calculated after budgets and levies from the City of Lincoln, Lancaster County, Southeast Community College and other entities are set in upcoming weeks.
It must be noted that the LPS increase falls under the revenue cap that was included in the new state funding law. The LPS proposed base growth cap for next year is calculated by the state at 3.61%. LPS could add an additional 4% increase to that amount if it was approved by at least 70% of board members.
But the LPS increase is within the 3.61% limit, evidence that the district is doing its best to comply with the state budget restrictions while growing enough revenue for this year’s operational needs and preparing for future state funding drops.
The LPS proposal is reasonable, responsible and should be approved in September. Feedback and questions have been sparse at community input opportunities so far, but residents still have the chance to learn more this week, with meetings Tuesday at 5 p.m. at the Lincoln Southwest Commons and Thursday at the North Star Commons. Interested parties can attend and decide if they agree.
