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Plum school taxes to rise 4.4 percent, and district to borrow more

| Wednesday, May 17, 2017, 10:42 p.m.

Plum School District property owners should expect to pay 4.4 percent more in real estate taxes next school year, and the school district still needs to borrow more to balance the budget.

Board members voted 6-3 at a special meeting on May 17 to approve a preliminary 2017-18 budget.

Board President Kevin Dowdell, Vice President Michelle Stepnick and fellow School Directors Jim Rogers, Reginald Hickman, Michele Gallagher and Rich Zucco voted in favor.

Sue Caldwell, Steve Schlauch and Vicky Roessler dissented.

The proposed budget totals around $65 million and includes a 0.866-mill property tax hike.

The state inflation-based index would have allowed Plum school leaders to raise taxes by only 0.659-mill. But the state Department of Education last month approved the district's request to increase taxes above the Act 1 index — a formula that limits tax increases — because of increased pension costs.

Business Manager John Zahorchak said the next school year's pension obligation is projected to rise by nearly $1 million, to $9.7 million.The budget draft includes a $4.1 million deficit projected for the start of the school year, but doesn't call for teacher furloughs or program cuts.

The current tax rate is 19.377 mills; the increase, as proposed, would increase millage to 20.243. One mill generates about $1.5 million in revenue for the district.

A property owner with a home assessed at $100,000 would pay about $86 more, if the current budget proposal is approved.

The new property tax bill on such a property would be $2,024.

District to borrow

The board also voted 6-3 to pursue a 12-year, $5.6 million bond to increase revenue over the next three years. Zahorchak said about $5 million will be used toward district expenses, and the rest will go to fees and reimbursements from the state.

He said $1.4 million will be used to balance the 2017-18 budget, $3 million in 2018-19 and the rest in 2019-20. The district also took out a $5 million loan last year to help pay for pension obligations and transportation expenses. Zahorchak said he anticipates some minor tweaks to the budget prior to next month's final passage such as updated state and federal revenues, but nothing that would change the tax hike.

The budget will be posted for 20 days prior to adoption. “I'm happy that the budget got approved tonight,” Zahorchak said. “I'm happy about the transparency that went through the process of passing this budget. I think it was all out there for the public.

“I'm happy we didn't cut programs. I'm not thrilled about having to borrow money to have to pass the budget. The deficit is still existing, and we've got to find ways to close that gap.”

Schlauch said he opposed the budget because of the tax increase, having to take out a loan to balance it and a lack of expenditure cuts.

“We shouldn't be borrowing money we don't have,” he said. “It's irresponsible and it digs a deeper hole. We're putting all the burden on the taxpayers by raising taxes. We're doing next to nothing on the expenditures side. We need to make cuts.”

Zucco said he was not in favor of raising taxes or taking out a loan either, but the board had to do something to balance the budget. “This is Plum's last chance to turn things around,” Zucco said.

Dowdell said time was wasted with infighting instead of better budget planning. “We probably could have done a little more if we hadn't spent so much time bickering,” he said. Dowdell said he would have liked the district to recruit Chinese students to increase tuition revenue for next year, but “we just ran out of time.”

Michael DiVittorio is a Tribune-Review staff writer.

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