How Long Will the Ed-Fund Increase Last?
Its no small matter; the D-300 education fund referendum will cost the owner of a $300,000 home $522 in the first year alone. Voters considering this issue must weigh the costs of the tax increase against the benefits. As data from District 300 shows, this permanent tax increase is designed to provide only temporary budget relief. When the increase no longer satisfies the District, voters can expect another request for more money.
The chart below comes from the D-300 website (here). It shows the district’s negative operating fund balance without the Working Cash. This chart is the District’s projection of the size of the Operating Fund Balance over the next five years assuming the education fund referendum passes.
Passage of the referendum causes the fund balance to become less negative owing to the large influx of new cash. Notice, however, that the steep fund increases in 2006 and 2007 suddenly come to a halt in 2008. Despite a large tax increase in 2006, the Operating Fund balance in 2008 is almost unchanged from 2007.
It gets worse. A strange thing happens starting in 2009; the fund balance begins to fall! By 2010 and 2011, the rate of this fund decrease accelerates. A drop in the Operating Fund balance means the District has once again entered a period of deficit spending.
According to D-300’s own projections
After a large, permanent tax increase in 2006, D-300 plans deficit spending in 2009!
Such a large tax increase should last more than three years. Of course, the onset of deficit spending does not mean the district will return to voters immediately. To give an idea of when D-300 might come back for more money, we can look no further than the District’s chief financial officer, Cheryl Crates. At a meeting to discuss the education fund referendum, Crates said “If both D-300 referenda pass, there will be no more ask for five years.”
District 300’s inability to control spending is the root cause of its endless tax increases. The solution to D-300’s budgetary problems is to set spending based on available funds, not to increase taxes to match spending.