CHICAGO – The majority of school districts seeking to override Wisconsin-imposed property tax caps on operating revenue won, Moody's Investors Service said.
The Nov. 8 election results represent a credit positive for the 18 districts "because they enhance revenue-raising ability and operating budget flexibility," Moody's said in a recent outlook piece.
Districts rely primarily on state aid and local property taxes for their operating revenue but their ability to raise revenue to keep pace with operating costs is limited to a per-pupil cap. In fiscal 2017, the floor was $9,100 per pupil. School districts can only exceed the per-pupil revenue limit with voter approval for debt issuances or additional property tax levies.
Between 1996 and 2009, the state minimum per-pupil spending increased by an annual average rate of 3%. However, since 2009, the amount has remained relatively flat. "Districts have struggled to absorb growing operating costs amid stagnant revenue trends," Moody's said.
Voters signed off on 90% of the requests they received from school districts to issue bonds or exceed the revenue caps through a levy increase. Forty-three districts, or 90%, received approval for one or both ballot measures.
Twenty-one districts were seeking to exceed the caps with 18, or 81%, receiving approval. That represents a slight decline from the April 2016 election, when 85% of ballot measures were approved. The approved property tax increases, which vary in dollar amount, will raise funds over multiple years.
Among the winners was the Madison Metropolitan School District, rated Aa2, which received voter approval for $26 million over four years to prevent cuts.
Eau Claire Area School District, unrated by Moody's, approved the largest operating levy to override the cap in the state, which will raise $87.9 million over 14 years to address a projected $2.3 million budget deficit for fiscal 2017 and pay debt service on $25 million in new debt.
For districts where voters rejected requests to lift the levy caps, the results are a credit negative, Moody's said.
For example, voters rejected a request from Turtle Lake School District, rated A2, to raise $995,000 annually for five years, which would have replaced the current levy of $600,000 that expires at the end of the current fiscal year. Without passage, Turtle Lake will have to cut $453,000 in costs for fiscal 2018. Turtle Lake plans to return to voters in April to try again.
