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Tax relief likely: School district to consider actions resulting in $600,000 in local property-tax relief

BEMIDJI -- The school district is expecting a decrease of nearly $600,000 in its local property tax levy for 2014-15, thanks to changes enacted last session by the state Legislature.

The Bemidji school board on Monday will be asked to formalize actions that should result in decrease in the local property-tax levy by $591,715, according to Chris Leinen, director of business services.

The Legislature made two major changes in referendum formulas and their approval processes, which will result in the local tax-levy savings by providing additional state aid.

A "location equity revenue" formula was developed to convert a portion of referendum dollars to general-education dollars, which would reduce the voter-approved referendum.

"What's basically happened is the Legislature said you will convert $212 in your case (Bemidji's) ... and it will have a higher equalization factor, which means more state aid, less local levy," said Leinen, during a Monday evening work session. "That's what's happening."

The board could opt to reject or decline it, but "there really is no reason to do so," Leinen said.

"It does provide a significant amount of tax relief and the state is picking up the cost of that tax relief," he said.

Additionally, the board next week will decide whether to convert a portion of its voter-approved operating referendum authority to a "board-approved" authority.

But, Leinen said in recommending against the move, the voters in November opted to extend the operating levy through 2021, and a board-approved authority would only last up to five years, though it could be reauthorized by the board in five-year increments.

Changing to a board-approved levy would not result in greater state aid as the equalization factor will remain the same, Leinen explained.

"There's really no reason to affirmatively convert from a voter-approved to board-approved; all it would really do is shorten the lifespan of that levy for seven years down to five years," Leinen said.

Further, he said, that action would change the characterization of that levy on the tax statement mailed to property owners, showing a shift from a voter-approved levy to other local taxes.

"There's really no reason to do it," Leinen said.