The Truth About Missouri School Taxes
In the state of Missouri the only regular local revenue a public school district can have is through property taxes. Other entities such as counties and municipalities can tax by sales tax or other flat tax rates. School districts in Missouri do not have this ability, and all regular local revenue is only through property taxes.
School property taxes in Missouri are determined by two separate factors. The first factor is the assessed value of property within the school district boundaries. Assessed value is a term schools use; however, this term is often misunderstood by the public. Assessed value is not the actual value of your house, farm, or business. Assessed value is the actual value of property multiplied by a percentage depending upon what type of property is owned. Residential property (a home) is assessed at 19% of actual value. Consequently, a home with an actual value of $100,000 has an assessed value of $19,000 in Missouri. Agricultural property in Missouri (a farm) is assessed at 12% of actual value. Subsequently, a farm with a $100,000 actual value has an assessed value of $12,000. Finally, business property in Missouri is assessed at 33% of actual value. The second factor used to determine school property taxes is the levy, or what tax rate is levied on property. The levy is stated in dollars and cents per each $100 of assessed value. This means that the assessed value of a property is then divided by 100. Therefore, each $1.00 of a property tax levy is $190 annually on a home with an actual value of $100,000 ($100,000 x 19% = $19,000, $19,000 / 100 = $190.00, and $190.00 x $1.00 = $190.00). When a question regarding property taxes (levy or bond) is stated on a ballot it must state how many dollars and cents for each $100 of assessed value to meet legal requirements. The Braymer C-4 School District’s current Lease Purchase Bond Question states $1.00 per $100 of assessed value. This amount of $1.00 would be $190.00 annually on a $100,000 actual value home, and/or $120.00 annually on a $100,000 actual farm value.
Another factor which is often misunderstood is a levy versus a bond. The simplest way to explain this is all bonds require a levy to pay for them. In short, all bonds require a property tax levy, but not all levies are associated with bonds. The term levy simply refers to a property tax rate, and since school districts in Missouri can only raise local funds through property taxes, then all bonds require a levy. Another distinction between a bond and a levy is bonds always have a sunset because they are all related to a building or other type of physical project. When the stated property is paid for then the levy to pay the bond ends. A levy itself can continue, unless the language on the ballot states a specific end day and/or associated the levy with a specific physical property or building project payment.
The final distinction I will make is on the type of bond. There are two types of bonds that a school district in Missouri can propose. The first type of bond a district can propose is a general obligation bond. A general obligation bond is where municipal bonds are sold to allow the district to incur debt (much like a home mortgage). The bond debt is then repaid over time up to a maximum of 20 years or whenever the bonds are paid for. A general obligation bond repayment requires a levy in the debt service fund to repay the bond debt. The second type of a bond is a lease purchase bond. In a lease purchase bond municipal bonds are sold and the district does not incur debt. The district pays for the physical property or facility over time. This is most similar to renting to own on a home or property. A lease purchase bond requires a levy in either the general revenue fund or the capital projects fund. The lease purchase bond is paid over time up to a maximum of 25 years and the levy associated with this type of bond also sunsets when the bond is paid. This could either be a 25 year sunset or earlier (whichever comes first).
In summary, the Braymer C-4 School District is asking it’s voters on April 7th to approve a lease purchase bond. This lease purchase bond is to and can only be used to construct, new locker rooms; new Wellness Center for both school and community use; Agricultural Building improvements; new security entrance; heating, ventilation, and air conditioning (HVAC) upgrades; to complete other renovations, remodeling and repair improvements to the existing facilities of the District; and to meet the additional operating needs of the District? If approved by the voters, this lease purchase bond would add an additional $1.00 per each $100 of assessed value to the school district’s property taxes.