Voters appeared to be one step closer Tuesday to potentially casting two ballots for a new elementary school and building improvements district-wide in Abilene.
The Abilene City Commission gave consent at a work session for city staff to prepare an ordinance to allow voters to decide if a portion of city sales taxes can be used to offset property taxes for USD 435’s $27 million to $29 million project.
The school district is seeking a 0.4 percent increase in Abilene’s sales tax, which would raise the city’s rate to 8.65 percent. That rate would fall in the middle of area sales tax rates, but would be above Salina’s 8.05 percent and Manhattan’s 8.4 percent rates. Junction City (9.4 percent) and Council Grove (8.85 percent) are the only two area communities with higher rates. Clay Center, Herington and Lindsborg are all at 8.65 percent.
Commissioners are expected to vote on the ordinance at their Oct. 29 meeting. If the ordinance is approved, Abilene voters would have the final say on raising the sales tax and passing the school district’s bond issue. Voters living in the school district but outside Abilene’s boundary would only be allowed to vote for the bond issue.
While city staff will prepare the ordinance, it’s unclear if it will receive unanimous support at the commission’s next meeting.
“I’m not sure that we want to go much higher than 8.65,” Commissioner Brenda Finn Bowers said. “I’m concerned that would be limiting,” to the city.
The city has the option of passing a dedicated sales tax for 10 years or a general sales tax for the life of the bond. The city is limited to approving 1 percent total in dedicated taxes and already levies 0.25 percent for street improvements and 0.35 percent for pool and library upgrades. The latter tax will sunset in 2017.
“If we move forward with this, that would take us to the cap,” City Manager David Dillner said of the dedicated sales tax option.
“The decision is not to do the sales tax,” Commissioner Dennis Weishaar said. “The decision is to allow citizens to vote on the issue.”
Commissioner Angie Casteel voiced her favor of allowing voters to decide, but she remains wary of the proposal.
“The thing that holds me back is that we’re not doing enough to increase our tax base,” Casteel said.
Finn Bowers also noted that even with the school district receiving about $400,000 per year in sales tax from the city, property taxes in the district would rise significantly.
For a $27 million bond with no sales tax, the district’s bond and interest levy would increase 13.72 mills, according to an estimate from bond counsel Steve Shogren.
The smallest increase for a $27 million bond would be 7.86 mills assuming a 0.4 percent general sales tax over 25 years. Roughly 10 percent of the revenue generated by the general sales tax would remain with the city.
The cost to a taxpayer with a $100,000 home ranges from $157.78 per year for a 20-year bond with no sales tax to $90.39 per year for a 25-year bond with 0.4 percent general sales tax.
Shogren said the appeal of using the sales tax is to lessen the burden on property owners and allow visitors to the city to help fund the school’s improvements. Shogren also said he would advise that both the sales tax and bond initiatives be tied together, meaning voters need to approve both for the project to proceed.
For a $29 million project, the district would levy 14.76 mills over a 20-year bond with no sales tax, raising the cost of owning a $100,000 home by $169.74 per year. Under a 25-year bond with a 0.4 percent general sales tax, the levy would fall to 8.8 mills and the tax on a $100,000 home would rise by $101.20.
School board members informally set Dec. 2 as a target date to vote on a resolution to start the bond process, which would allow a special election on the issue to be held in the spring. The initiative would give USD 435 a new elementary school, provide for security upgrades at other schools, and see the construction of a new gymnasium and auditorium at Abilene High School.