Answer Man: You'll pay for inflation if referendum passes
Dear Answer Man, you're truly the definitive source of information on the Rochester school referendum. I have two questions for you, and I know you'll have the answers.
I received the mailing from the school district about the referendum last week, and it notes that the proposed levy would be indexed for inflation -- in other words, it would go up at the rate of inflation each year for 10 years.
Is the current operating levy indexed for inflation? How much would indexing cost over the years on that mythical $200,000 house that we always read about?
And according to the district, the current operating levy will expire after taxes payable in 2016 are done. Does that mean if the referendum is voted down and the old levy expires that taxes will go down?
You're right that I'm the definitive source on the Rochester school referendum coming up on Nov. 3, but more important, I'm the definitive source of information on everything else, too.
The current operating levy ($578 per pupil) is not indexed for inflation. The proposed levy ($836 per pupil, for 10 years) would be linked to inflation. At the moment, inflation is all but nil, but 10 years is a long time -- while it's unlikely that inflation will skyrocket, life comes with no guarantees.
Brenda Lewis, the district's assistant superintendent, said by email that "given the other areas that are levied -- for example, cost savings when we reduce debt results in a lower levy amount, which decreases taxpayer burden -- as well as an expanding tax base will most likely result in little to no impact on the individual tax payer with respect to inflation."
So I don't have further calculations on that one. The highest inflation rate in the past decade was 4.28 percent in January 2008. It was 2.93 percent in January 2012, but for most of the past eight years, it's been significantly less than that. Currently, it's estimated at about 0.2 percent. That's an economic fact that doesn't get mentioned a lot. Yes, prices for consumer goods always go up, but averaged out, they haven't gone up much in the past several years.
Will a "no" vote mean that taxes will go down by the amount of the expired levy? Not a chance in the world. Bills must be paid, and while budgets may be slashed, people laid off, etc., there still will be a robust property tax to cover the rest. The Rochester School Board recently approved a preliminary maximum levy for 2016 that's down 0.1 percent from the current year.
That clearly would be revisited if voters reject the operating levy -- and I assure you, there would be another referendum next year for property taxes payable in 2017.
Dear Answer Man, do you know what today is in St. Paul?
I know everything. It's Indigenous People's Day in St. Paul, as a result of St. Paul City Council action in August. Several other cities around the country, including Minneapolis and Grand Rapids, have also done away with Columbus Day and celebrate indigenous people instead.