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August 4, 2014

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Oct. 4, 2011

Why the 'tax levy limit' isn’t  the final levy limit

budget logo (c) dreamstimeA look at the exemptions under the law


Note: This story reflects information as of the published date. It will be updated should any new information/clarifications be made available at the state level.

The “cap” or threshold that determines whether a district needs a simple (50 percent plus 1) or super (60 percent) majority to pass a school budget is based on the tax levy limit.

However, it is possible for a district to propose a school budget that carries a tax levy that is above the limit and still only need a simple majority for it to pass.

This is because the new law allows certain exemptions to be excluded from the tax levy limit.

Those exceptions currently include capital local expenditures, certain court orders/judgments, and certain portions of employee retirement costs.

Capital tax levy is the tax levy necessary to support capital local expenditures. Capital local expenditures are the local taxpayer-supported portion of the capital tax levy. It is budget expenditures resulting from the construction, acquisition, reconstruction, rehabilitation or improvement of a district capital facilities or equipment, including debt service and lease expenditures and transportation capital debt service that are funded by the taxpayers.

The Court orders/judgment exemptions are the tax levy necessary for expenditures resulting from court orders or judgments arising out of tort actions for any amount that exceeds 5 percent of the total taxes levied in the current school year. This excludes tax certioraris.

Pension contribution cost increases that exceed two percentage points are also exempt. For example, if employer pension contribution costs increase from 14.6 percent of payroll to 16.8 percent — a 2.2 percent different — only the funding for 0.2 percent of the increase is exempt.

Once those exceptions are added to the tax levy limit, the result is the maximum allowable levy a district can propose for which only the approval of a simple majority of voters (more than 50 percent) is required. Any proposed tax levy amount above this limit will require budget approval by a supermajority (60 percent or more) of voters.

As always, parents, staff, students and taxpayers are urged to voice their opinions on these matters to our elected leaders. Click here for elected leaders' contact information.  

Return to the Tax Levy Limit Information page