Can Growth Pay For Itself?
Homeowners in District 300 wonder why they are being asked to raise their taxes to purchase and operate new schools. After all, the need for these schools comes from growth caused by new home construction. Shouldn’t the impact fees and tax revenue from these new homes pay for the construction and operation of new schools?
Not so fast, say pro-tax hike groups such as Advance 300. They claim that growth cannot possibly pay for itself, so homeowners who have already bought schools need to pony up once again. To defend this position, Advance 300 developed a fictional example known as “Magic Court”.
Flawed Assumptions
Advance 300’s “Magic Court” example is so fraught with errors and misrepresentations that it actually proves the very point they’re trying to refute. Growth can and should pay for itself. The “Magic Court” example makes these incorrect assumptions:
Myth #1: Children of homeowners remain in the district forever.
Fact: A child entering the system from youth will only spend 13 years in K-12 schools, after which time they cost the district nothing. Also, some new families will choose private school or home school.
Myth #2: Residential development is the only local revenue source.
Fact: Besides residential property, new development adds industrial and commercial property.
Myth #3: It costs $7,674 to educate a student in District 300.
Fact: There is a big difference between what education costs and what educators choose to spend.
Flawed Results
Armed with these flawed assumptions, the “Magic Court” model computes the Equalized Assessed Value (EAV) per student. Assigning tax revenue based on this EAV, Advance 300 concludes that revenue from the Magic Court development cannot meet the spending needs of D-300. In fact, the Magic Court example produces a shortfall of over 71%! History tells a different story:
“Magic Court” EAV/student: $39,600
Actual D-300 EAV/student: $126,930*
*Source: D-300 Illinois Report Card 2003-2004
The “Magic Court” EAV/student is less than 1/3rd of the historical figure, attesting to the poor model used to calculate EAV/student. Consequently, the Magic Court example grossly underestimates the revenue expected from new development.
When actual EAV/student data is calculated, the growth revenue is less than 10% short of the present expenditures by District 300. In fact, it shows that modest decreases in spending could allow growth to completely pay for any increase in operating costs.
In spite of Advance 300’s fatally flawed analysis, tax hike supporters claim the “Magic Court” example “...completely disproves the belief by some that ‘growth pays for itself’”. Magic Court proves no such thing; it only proves that Advance 300 is bad with numbers.