Learning Community Common Levy Ruled Unconstitutional!
On Friday September 23, the Learning Community (LC) common levy was ruled unconstitutional by Sarpy County District Court. This ruling is a result of a lawsuit filed by the Sarpy County Farm Bureau and two Sarpy County taxpayers, claiming that the LC common levy was unconstitutional. Through the LC common levy, property taxes collected for the 11 LC school districts go into one pool and are then redistributed to the school districts.
How does the PLSD feel about this ruling?
It is nice to have a judge validate what the District believes to be true. The District believes that resources generated in the PLSD need to stay in the PLSD. This court ruling validates the District’s beliefs.
What impact has the LC common levy had on the PLSD finances?
For the PLSD, the implementation of the common levy has resulted in $1.422 million loss in revenue over the 3 years of implementation. This would equate to nearly four cents on the tax rate. The first year PLSD lost about $600,000, the second year the loss was $500,000 and this year the projection is to lose $300,000.
What does this ruling mean for taxes collected by the LC?
Currently the LC levies $.95 cents of the total $1.05 tax rate allowed by school districts. Once the $.95 cents is collected, it is then redistributed back to the 11 LC school districts. The ruling would say it is unconstitutional for the LC to levy this $.95 cents. Under the ruling individual school districts would have to go back to levying their own tax rate and keeping the local taxes collected in the local districts.
What impact does the ruling have on the 2011-12 budget?
The impact is still unclear. An appeal has been filed by the LC with the Nebraska Supreme Court asking for a stay on the decision until the appeal process is completed by the Nebraska Supreme Court.
What if a stay is granted?
The LC will continue to collect the $.95 cents common levy tax rate until the case is decided on by the Nebraska Supreme Court or the law is adjusted legislatively. The PLSD will proceed with the current 2011 budget recently adopted and will set the tax rate accordingly at the October 10 Board meeting.
What if a stay is not granted?
School districts will need to adjust their budget’s and tax rates accordingly. The former $.95 cents collected by the LC common levy will need to be levied and collected by the individual school districts. Without the stay, all taxes collected in a district would return to pre-LC law and remain with the district.
Will the PLSD need to amend their budget if the stay is not granted?
Yes. The ruling only impacts the common levy. However the LC law defines how the LC school districts receive both common levy and state aid. State aid for 2011-2012 has already been determined and distributed based on the current law. There is no language in the ruling to change the state aid distribution. The current 2011-2012 PLSD budget is based upon the redistribution of BOTH state aid and property taxes. Since all state aid and local taxes do not return to the local districts this ruling will result in an additional$230,000 deficit in the current adopted 2011 District budget. Taxes may need to increase to meet this shortfall.
How will the state aid distribution be addressed?
Any changes in the state aid distribution, as defined in the LC law, will have to happen legislatively. The ruling only addressed the common levy.
Is this ruling a good thing for the PLSD?
YES. It is the first step in the right direction. It does not address all of the District’s concerns with the LC law. However, it is a victory in the District’s battle to keep local tax dollars within the PLSD.
Wait and see. By the next PLSD School Board meeting (October 10, 2011) the Board is required to take action on the tax rate. If a stay is granted prior to that meeting, the Board will set the tax rate based on the current adopted budget. If the stay is not yet determined or is not granted, the Board may need to amend the current budget and set the tax rate accordingly.