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Red Plan Debt Leads to Tax Levy Increase in Duluth

Updated: 12/18/2013 2:00 PM
Created: 12/17/2013 9:54 PM WDIO.com
By: Travis Dill
tdill@wdio.com

The Duluth School Board voted for a property tax levy increase on Tuesday to prevent Red Plan debt services from pulling more money from the district's general fund.

The increase means the owner of a $150,000 home will pay $61.55 in new taxes with most of that increase coming from a voter-approved operational levy.

Bill Hanson, the district's business services director, said the sale of unused properties, like Central High School, were previously factored into the school's budget. That led to a reduction of the district's general fund when the properties never sold.

Documents Hanson presented at the school board meeting on Tuesday show the school's general fund was down to $1.9 million in June. 

Hanson said paying the Red Plan debt from the general fund was no longer feasible so board members passed the property tax levy increase to make up for the unsold buildings. Hanson expects the levy increase to bring the general fund back up to $6.5 million by next June.

Board members passed the increase with almost no discussion on the resolution. Only member Art Johnston opposed the tax increase.

Hanson said paying the debt service means about $16 in new taxes for a home valued at $150,000. He said that could have been much higher if not for savings in employee benefits and other areas of the budget.

Still residents like John Stromgren opposed the tax increase. Stromgren said it could push retired residents to move out of Duluth.

“What happens when the money runs out from us citizens? Mayor Ness wonders why he can't increase the population of Duluth to 90,000 people. Why should the people of Duluth stick around when they can move to a warmer climate and pay less taxes?” Stromgren said.

Voters did pass a levy increase this fall to help reduce class sizes and pay for new curriculum.

On a home valued at $150,000, the voter-approved levy will increase taxes by about $45 a year. Adding that to the board-approved levy puts the total tax increase at just over $60 a year for a home valued at $150,000.

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