REGIONAL – Some area homeowners expecting to see a reduction in property taxes were surprised to see an increase.

That’s because measures to ease property taxes statewide have been undercut by other changes that give area school districts and the Cook-Orr Area Healthcare District greater latitude to raise taxes.

In 2013, legislators gave school districts the ability to collect up to $300 per pupil through an excess operating levy without requiring voters’ approval.

Legislators increased that amount up to another $424 per pupil through the Local Optional Revenue program. Under the program, qualifying districts automatically have $424 added to their levy unless they specifically request the state reduce the amount or opt not to take any of the additional dollars.

St. Louis County School District enacted the $300 per pupil levy and plans to take the additional $424 that will be available to districts next year. Both taxes apply only to year-round residents and have no impact on seasonal or recreational properties.

The result is a sizable jump in property taxes for homeowners in the district.

“We’re not seeing any relief on property taxes,” said Judy Koch, a Leiding Township resident, who saw her school excess operating levies jump from $17.24 two years ago, to an expected $89.06 in 2015. “There are a lot of people here who need some relief, said Koch. “They’re on fixed incomes and can’t afford to see their taxes keep going up.”

Orr area resident John Poczejak said his property taxes in his proposed tax statement are also up. “I’m paying a $100 more a year and it’s all school taxes,” he said.

Other properties in northwestern St. Louis County, examined by the Timberjay, saw similar tax increases. While the levy for the school district’s voter-approved bond issue fell from $395 to a proposed $333 for next year on a Camp 5 Township homestead valued at $233,500, other school district levies, over which voters had no say, jumped from $116.27 in 2013 to a proposed $368.80 in 2015. That pushed overall school taxes on this homestead 37 percent higher, from $511 two years ago, to $701 in 2015. Overall, taxes on the property will rise from $2,418.28 in 2014 to a proposed $2,548 in 2015.

It’s not just school district taxes that are contributing to higher tax loads. The Cook-Orr Area Healthcare District is calling for a $100,000 increase in its levy, and that’s fueled the rising tax bills in northwestern St. Louis County. That same Camp 5 Township residence that experienced a 37-percent jump in school taxes, saw its hospital district levy increase from $244 two years ago, to an expected $303 in 2015. That’s an increase over two years of 24 percent.

Previously, the hospital district levy had a cap and could only be used for capital improvements. But special legislation approved in 2008 removed the cap and lifted the restriction on how the funds could be spent.

In the six years since that legislation was approved, the healthcare district levy has more than doubled from $600,000 to more than $1.39 million for next year.

Part of that growth can be attributed to pouring more of the levy into operating costs. Because state funding hasn’t kept pace with inflation and rising care costs in nursing homes, the Cook Nursing Home is losing between $50 to $55 per day per client.

There are numerous other factors prompting the increase in the levy, according to Hospital Administrator Al Vogt, including the costs of sequestration in federal payments to health care facilities.

Meanwhile, the Cook-Orr Area Healthcare District is contemplating a major remodeling and expansion project for the nursing home. Estimated cost of the project is about $6 million, which could add as much as $200,000 to $300,000 more to the healthcare district’s levy for two to three decades.

Legislators

hear complaints

Both state Rep. David Dill, DFL-Crane Lake, and state Sen. Tom Bakk, DFL-Cook, have heard complaints from constituents about high property taxes. Although Dill said the Legislature approved about $500 million in property tax relief, it hasn’t brought tax bills down because of a variety of factors, including the school district and healthcare district increasing their levies.

Koochiching County was ordered to reassess market values for properties above $100,000, added Dill, saying those reassessments resulted in higher taxes there for some homeowners.

Bakk contended that school districts and the hospital district had sought more flexibility in raising taxes, and legislators provided it. He said if the entities could justify the need for the additional dollars, they should do what they feel is necessary.

Meanwhile, some potential relief for school district residents could be on the horizon. The Legislature established a fund using taconite dollars that can be used to pay down the bond debt that St. Louis County School District incurred for its restructuring. The district can apply for funding in 2015. Although it’s uncertain how much the district will receive, there has been talk of $2 million or more on an annual basis to reduce the $78.8 million in bonds and interest that the district is paying for its restructuring project.

Homeowners will actually see some reduction in the bond debt in 2015 because a portion of the bonds were refinanced at a lower interest rate. That’s why properties examined by the Timberjay showed modest reductions on school bond payments for 2015.