Cost impact analysis

2022 School levy cost impact analysis comparison: The Everett School District's version vs a logical, accurate version

Executive Summary

The Everett School District's version of the levy cost analysis, on its taxpayer funded website, is advertised as an answer to the question, "How much will the levies cost?"

For a home with an assessed value (AV) of $500,000, they came up with a figure of $420 per year if the levies are approved.

The following more realistic analysis will show that the actual cost of these levies for a homeowner with a 2021 $500,000 AV (assessed valued) home is an average of $2,000 per year or is $12,000 over the six years that the proposed levies cover.

If we compare what that same homeowner was paying to the Everett School District for the previous 6 years to what they will be paying for the next 6 years (if the levies are approved), we get a difference (increase) of $621 per year if only the district's levies and bond repayments are considered. If we include the “State School” category with the levies and bond repayments, we get a difference (increase) of $910 per year. The "State School" category on taxpayers' property tax bills all goes to the Everett SD and therefore it should be considered in any analysis or comparison of school taxes.

A period of 6 years is used for the comparison since the proposed new capital levy is for 6 years. The proposed new EP&O levy is for 4 years. Since the passing of the McCleary Decision, the EP&O levy is actually supposed to be called an "Enhancement" levy. These are new, proposed levies. The passing of these proposed levies will result in new and higher taxes. The Everett SD is not providing citizens with a transparent accounting of the proposed tax measures. In representing the impact of the proposed levies the way that they have, the district is perpetuating poor financial literacy skills of the students in their charge.

Details

The following table shows pertinent data for a $500,000 assessed valued home. The tax year of 2021 is used as the baseline for comparison since that is the year that taxpayers have just paid. The Total District AV is for all properties (homes, apartments, businesses) in the Everett SD tax area. The numbers for 2017-2022 are actual. The numbers for 2023-2028 are estimates from the district from their bond/levy projection spreadsheet (can be obtained with a public records request).

The example home's AV is assumed to grow at the same rate as the Total District AV. This is a good assumption since 99.5% of AV growth is on the appreciation of existing properties.

The District's Web Page On The Levies Displays The Following Cost Information

What's Wrong With The District's Analysis?

1) The Everett School District is confusing and misleading taxpayers by focusing on "rates". This is a common tactic that many school districts in WA use. Rates would only be a valid factor to focus on for comparison if the value of properties remained constant over the period being considered.

2) The Everett School District is assuming the example home's AV doesn't change while all other properties appreciate substantially - increasing the Total District AV. That is inconsistent and leads to their gross underestimation and error in their analysis.

3) The district goes on to say that these new, proposed rates ($4.08 / $1000 AV) are "substantially' lower than rates paid by district property owners prior to 2021.

The district fails (again) to mention that AVs (assessed values) have been increasing rapidly - at a much faster clip than inflation. So of course tax rates should drop. It is a simple arithmetic formula.

As assessed values go up, tax rates should go down to maintain the same amount of taxes to be collected. This reduction is not because of some altruistic action from the school district. The school district keeps saying that we want a "stable" tax rate. Well, we (citizens who pay these taxes) don't want a "stable" tax rate. We want a stable tax amount in dollars.

4) Additionally, the district fails to mention "State School" taxes on our property tax bills at all. The "State School" category has grown substantially because of the McCleary Decision. All of the taxes in the "State School" category (for all properties in the district's area) are routed to the Everett School District. It first goes from the pockets of local hardworking taxpayers, to the county, to the state, then back to the Everett School District - in total. Not just some of it. But all of it. And even that is not enough. The State (from state taxpayers) has to send even more money to the Everett School District (largely from our state sales taxes).

5) Homeowners are not the only ones paying property taxes. Renters (knowingly or not) pay for property taxes as part of their rents. In fact for a typical 2 bedroom apartment or condo, 2 months of their rent will go to property taxes for that apartment’s portion of the apartment complex's property tax bill. The Everett SD tries to give the false impression that only homeowners are paying property taxes. All business owners are also paying property taxes on their buildings and land. Including the "State School" tax category (since all of it goes to the Everett School District), about 65% of our property taxes goes directly to the Everett School District. And that portion will increase to about 70% by 2028.

6) And lastly, the district did not answer its own question, "How much will the levies cost?"

The district only confuses voters with a discussion of rates and then tries to show a delta of what a homeowner will pay compared to what they are already paying. That is like an underhanded car salesperson (years ago) answering the cost question with, "It's only a $100 more a month compared to what you are currently paying - for maybe a few more years." This is why the Truth In Lending Act (TILA) came about.

The cost of these 2 measures can be easily calculated for the $500,000 home homeowner.

The total cost of these 2 measure (in dollars) is almost $600M ($597,999,000).

The Total AV for all properties in the district, for 2021, was $25.00B to 4 significant digits.

Therefore, the proportion of tax obligation for these 2 levies for the $500,000 AV homeowner is:

$597,999,000 * $500,000 / $25,000,000,000 = $11,960

So the answer to the question is that roughly $12,000 is the cost for these 2 measures for the example homeowner.

Summary Charts and Tables

For the "State School" category (that goes to the Everett School District in total), a 1% growth per year in the amount was assumed.

For the "Other Non School" categories, a 1% growth per year in the amount was assumed.

These "Other Non School" categories include Everett or Mill Creek city taxes, county taxes, emergency medical services, and the Central Puget Sound Regional Transportation Authority. Everything else goes to the Everett SD.

The following screen snapshot is from the Snohomish County Assessor's parcel lookup on an Everett School District area property with an assessed value of $500,000 as of 2021. The annotated items all end up at the Everett SD - in total.

https://snohomishcountywa.gov/5167/Assessor