Clarifications about the 2022 HSD Levy
During the public comment portion of the Jan. 31 HSD Board Meeting, a concern was raised about the lack of clarity relating to levy rates and levy collections in our levy publications. I understand why levies are confusing. This is a topic that only comes up every few years and it can be more complex than it initially appears.
While it is easy to get lost in the details when trying to explain how a levy works, I am going to try to explain a few key points about the levy that is on the Feb. 8 Special Election ballot:
Is it a levy or a bond? What’s the difference? The proposition on the Feb. 8 ballot is a levy, specifically an Educational Programs & Operations Levy. A levy is a short-term, local property tax that, if passed by voters, generates revenue for the district to fund programs and services that the state does not fund or fully fund as part of “basic education.” Levies require a majority (50% + 1) to pass.
A school bond is a tax that usually involves a property purchase or large-scale school construction or capital projects. Bonds require a supermajority (60%) to pass.
The saying, “Levies are for learning. Bonds are for building,” holds true in most cases.
What is a levy rate? A levy rate is the amount of property tax per $1,000 of assessed property value to fund a voter approved levy amount. So if the levy rate is $1.00 it means that for every $1,000 of property value, the owner will pay $1.00 in taxes. For example, for a home valued at $450,000, the homeowner will pay $450 annually in property taxes that will go toward local schools.
Why can the levy rate go up or down? The advertised rate usually comes with the qualifier “estimated.” It is an estimated rate because over time home values can decrease or increase as can the number of homes. As values increase, levy rates decrease. The opposite is also true: If values decrease, rates increase. This is because a levy proposition includes three key pieces of information: A duration, an estimated levy rate, and an amount collected. This is a 4-year levy, with an estimated levy rate of $1.89/$1,000, that will collect $4+ million per year from 2023-26. The amount collected will not change. Each year the levy will collect a specified amount regardless of whether or not the assessed valuation of Hockinson properties increases or decreases. This means that if home values increase more than projected, which is anticipated, the $1.89 rate will decrease.
Example: The Battle Ground SD Levy passed in November 2021. Its estimated levy rate was $1.99. Three months later, in January 2022, the Clark County Auditor’s Office set the 2022 BGSD Levy rate at $1.95.
What happened with the HSD's last levy rate? After the McCleary Decision took effect in 2018, levy rates across the state were capped at $1.50. The HSD passed a 3-year levy in April 2019 at that rate. In May 2019, the legislature raised the statewide levy lid to $2.50. The HSD School Board chose to keep the rate at $1.50. On top of this, when the district’s assessed valuation fell short of projections, the School Board chose to keep the rate at $1.50 even though the HSD could have collected at a higher rate to reach the amount that was advertised. This meant that the HSD under-collected $635,000, which along with rising costs, contributed to three years (2020-2022) of consecutive budget reductions.
Is the levy rate higher now than in the past? The HSD’s proposed levy rate of $1.89 is higher than the expiring rate of $1.50 but below the state levy lid of $2.50. Looking at the past ten years, school-related tax rates (state and local) averaged just over $6 the past three years compared to $8+ average the previous seven years.
Is this a complete overview of levies? Full disclaimer: No. There are more details and nuances. I know some of these answers are wordy, but I tried to keep this information as concise as possible without compromising accuracy.
More levy information can be found on the HSD’s Levy Information website HERE
I appreciate that these questions were brought to the School Board so we had the opportunity to respond and share additional information.
Hockinson School District