East Central College’s Board of Trustees Monday night voted to maintain its tax levy at the same rate for the second year in a row.
The operating tax levy for 2018 is .3700 cents per $100 in assessed valuation, and the debt service levy is .0841 cents — the exact same rates as last year.
The tax rates are subject to change based upon actions by the county board of equalization, the State Tax Commission, subsequent information, applicable law and certification by the state auditor.
The tax rates are set to produce revenues of at least $6,520,319, roughly $127,480 more than last year’s revenue.
The debt service levy is set to produce revenues of at least $1,471,650, which is required to meet the debt service of ECC for the calendar year.
The college’s assessed valuation rose by 1.9 percent this year, or roughly $34.4 million.
ECC President Dr. Jon Bauer said maintaining the debt service levy is a promise made to taxpayers after the passage of the bond issue that helped pay for the college’s health and science building.
However, Trustee Dr. Eric Park said he’s concerned that the debt levy isn’t being lowered this year. He said there are funds going unused that are being generated by the debt levy which taxpayers should be keeping.
With a higher assessed valuation, ECC would stand to gain more from a maintained debt levy. He said if the valuation is higher, the college should move to lower the rate.
“This is going to be a bit like deja vu because I brought this up last year,” Park said. “Seems to me we ought to at least consider reducing the levy for the taxpayers when it turns out we’re collecting more than what we can use.”
An institution’s debt levy pays interest and debt, and in some cases, according to Vice President Phillip Pena, can be used to retire debts early. He said the extra money that comes from the levy’s rate provides a cushion for the college, in case debt rates or other intervals change.
Pena noted that residents not paying taxes can have an effect on how much the college collects, making the cushion more important.
“My concern is that there are people who don’t pay their taxes that that kind of works out of, but we can look at that number,” he said.
Park said the college should lower the rate now, while the valuation is high. He said if it were to drop again the college could readjust.
Trustee Prudence Fink Johnson said she thinks it’s risky to take less instead of more when the college is already going through financial hardships. She said it would be difficult for the finances to be “surgically precise.”
“The last thing this institution wants to do is collect less than what it needs. I’d rather be slightly over,” Fink Johnson said. “It seems more responsible to me as a board member to have a little bit more than to fall short.”
When a debt levy collects any excess, the funds are carried into a debt service fund and remain in that fund’s balance.
Bauer said keeping the debt levy at the same level also enables ECC to pay off debts, putting the college in a better financial position going forward.
Board President Ann Hartley agreed with Bauer and mirrored Fink Johnson’s words. She said risking not being able to pay debts is worrisome to her.
“I’d be much more comfortable with a plan to retire debt early than I would to possibly run short,” Hartley said. “I agree we’re responsible for the taxpayers, but we’re most responsible for the students at this institution. I’d be really uncomfortable if I thought we might not have enough money to pay our debt.”
Park said he thought that was a very low risk, but agreed to looking at the issue again next year when assessment comes around again. He said he’d be even more adamant about lowering the levy if the assessment rises or stays the same.