Milford School District lowers tax rate for 8th year

Milford School District has lowered its school tax rate for the eighth time in a row.

Milford School District this week voted to lower  the school tax rate in both Kent and Sussex counties for the eighth year in a row.

The Kent County school tax rate from $1.6593 per $100 of assessed property value to $0.2807 per $100 value after receiving reassessed property values from that county.

The rate in Sussex also dropped from $4.6503 to $4.4556 per $100 of assessed.

One reason the district is able to lower taxes is because Milford, which straddles Delaware’s two southern counties, is experiencing a housing boom, with pricey subdivisions routinely popping up and expanding the district’s tax base.

“We received final information from Kent County that we are basing this off of,” said Dr. Sara Hale, the district’s chief financial officer. “Nothing has really changed since the preliminary information provided in May.”

Board President Scott Fitzgerald confirmed that this figure was after reassessment in Kent County and that Sussex County was still using old values.

“Kent County has the updated reassessed value, which is why the rate looks substantially different,” he said. “And then, next year, the same time, we will hopefully be presenting Sussex County in the same manner.”

Because Milford School District is split between Kent and Sussex County, school taxes must be balanced so that if a property were picked up from Kent County and moved to Sussex, the school taxes would remain the same.

Kent, Sussex tax assessments

A May presentation by Hale demonstrated that a house located in Kent County prior to assessment may have an assessed value in 1986 of $57,934, while the exact same house in Sussex would have a value assessed in 1974 of $20,500.

Because Kent County has a higher assessed rate, their school tax is calculated at a lower rate.

The reduction in the Kent County rate is likely temporary due to the requirement that the district match the rate for both counties. Once the Sussex County reassessments are completed, the school taxes will be adjusted again based on the new assessments.

Under state law, school districts are permitted to increase property tax collections by no more than 10% after reassessment. A bill introduced in December would have banned that allowance, but it was tabled in January.

At the county level, the reassessments are to be “revenue-neutral,” which means the county cannot bring in more revenue after the assessment than it did before, at first. That can change after an initial period of adjustment.

This means that once the assessments are completed, each county must set a tax rate that would allow them to collect the same in property taxes as they did prior to the reassessment.

This does not mean that individual property taxes will not change, however.

According to an explanation by Kent County Levy Court, some homes were underassessed in 1987 while others have had additions and improvements that could not be captured by the current assessment methods.

“If the current assessed value is $50,000 and the new fair market value is $350,000, that’s a 600% increase. Chances are that property will see a bump in taxes,” a fact sheet created by the county said. “On the other hand, if the current assessed value is $70,000, the jump to $350,000 is only 400% and the tax bill will be lower.”

Hale provided information in May that showed an increase in property value in Kent County of 542.80%.

Prior to the reassessment, Kent County had an assessed property value of $296,546,000. After the assessment, the total value was $1,906,187,000.

In addition to approval of the tax rate, the board also approved a preliminary budget that would be used to start the school year.

“Today is the first day of the fiscal year and I am bringing you a preliminary revenue and expenditure budget,” Hale said. “We created the revenue budget based on known amounts from prior unit counts.

“The state funds will not be updated until our final unit count on Sept. 30. Our local funds are based on estimates from the prior year as are our tax rate calculations. Our federal funds are based off of this year’s allocations which will be changing over the summer as we go through the consolidated grant process.”

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\Hale said 85% of expenditures from the prior year budget for all schools was included in the preliminary budget.

“We’ve also made a few known adjustments,” Hale said. ‘For example, in the district expenditure line, we will be taking over our office lease payment that was once federally funded. And then, we have a quite substantial adjustment to our athletic budget based on the tracking this year for officials and transportation increases that we experienced.”

Division III local salaries as part of the collective bargaining agreement were also included along with the capital improvement funds as part of the bond bill.

Hale noted these were preliminary allocations to get the district started in the fiscal year and that she would be back in January after the unit count is finalized with a final budget.

Board Vice-President Matt Bucher asked why tuition revenue was dropping from $1.8 million to $1.4 million.

“We have with the growth over the years, similar to our current expense tax, built up a reserve allocation there in the tuition tax fund,” Hale said. “So, just trying to spend down some of those reserve funds to maintain a conservative amount in the future.”