Burrell caps tax increase at 2.2%
The Burrell School Board committed to keeping any 2013-14 property tax increase within the state-formulated inflation index of 2.2 percent.
That index would cap a tax increase at about 1.88 mills, according to Business Manager Jennifer Callahan. The district's current property tax rate is 85.4 mills.
Districts must alert the Pennsylvania Department of Education by January if they plan to keep tax increases within the inflation-based index. If they anticipate needing to exceed the index, districts must request an exception from the state or put the proposed increase to the voters as a ballot referendum.
Tuesday's unanimous action by Burrell's school board does not necessarily mean next school year's tax increase will be 1.88 mills, but does guarantee any potential increase would not exceed that amount.
The board in June raised property taxes for this school year by 1.9 mills, or about 2.3 percent.
The board will consider refinancing a 2005 bond issue at its next meeting in February.
Callahan said she routinely monitors market conditions with the district's financial advisers. They agree it would be advantageous to refinance about $8.6 million in debt the district assumed during the Huston Middle School renovation project.
They estimate the district could save about $700,000 by refinancing, which likely would drop the average interest rates on those bonds from 5 percent to about 3 percent.
“We're at a historic trough in interest rates and we need to take advantage of it because they will go up,” said board member Scott Fisher.
Callahan said the savings would be spread out over about seven fiscal years.
The district annually makes about $2.9 million in debt payments.
It has a total outstanding debt of almost $32 million, Callahan said.
The bulk of the debt comes from the 2005 bonds, which total about $25 million. The rest of the debt is from 2009 bonds, which were a refinancing of a 1999 issue and are expected to be paid off in 2016.
Callahan said she will ask the district's bond counsel to attend the board's Feb. 12 meeting to finalize the details and possibly take action.
She said the refinancing process takes some time, but they want to move as quickly as possible to take advantage of the low rates.
Liz Hayes is a staff writer for Trib Total Media.