District 300 Says Income Tax Hike Won’t Prevent Cuts

Here’s the press release:

State tax increase will not prevent cuts in D300, but will assure state payments

The state tax increase now on Gov. Quinn’s desk for final approval would not prevent District 300 from needing to cut its budget as planned.

But it will mean that the state could make the payments owed to D300 this year and next.

D300 leaders had projected a deficit of $6.3 million this school year (2010-11) and an $8.3 million deficit for next year (2011-12).

Those projections had assumed that the state would somehow find a way to make all of its categorical payments to D300.

The payments should total roughly $19 million a year to fund categories such as

  • transportation,
  • special education, and
  • government grants.

Ken Arndt

“The state tax increase will not provide D300 with any ‘new money’,”

said Superintendent Ken Arndt.

“But it will keep us from slipping into a deeper hole that would have required us to virtually dismantle our educational system over the next few years.”

The proposal was approved this week by the State House and the State Senate to raise the state income tax from 3 to 5 percent for the next four years.

The rate for businesses would also increase during that time, from 4.8 percent to 7 percent. Illinois has been deficit spending for more than 20 years, which has created a massive fiscal hole similar to bankruptcy.

Illinois had already missed its first two payments due to D300 this school year, totaling about $9 million.

Assuming that Gov. Quinn signs the tax increase into law, it is unclear how quickly D300 and other districts would receive those overdue payments.

Therefore, D300 will move forward this month with issuing the Tax Anticipation Warrants (TAW’s) that School Board members authorized at their Jan. 10 Board meeting.

The $19 million in TAW’s, which are short-term loans that are repaid when a school district receives its property tax payments from the local counties, are necessary for D300 to make payroll this spring.

Counties only send local property tax payments to school districts twice a year, with the next tax payment from the counties not coming to D300 until May 2011.

D300 leaders still plan to make an estimated $8.3 million in cuts for the 2011-2012 school year, which will be the second straight year of large-scale budget reductions in D300.

“We are very grateful that we won’t have to make more than $8.3 million in cuts for 2011-2012,” Arndt said. “Even cutting that much is going to be hard on our students and our community.”

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Note that the press release does not mention that the tax increase on families will be 67%.

I also note that the distribution of property tax receipts has changed dramatically from what I did while McHenry County Treasurer. I instituted an every Friday distribution during tax collection season. Cutting back to twice a year allows county government to have the float, rather than the school districts.

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