Carlton property owners could see a tax increase two-and-a-half times what their counterparts in Wrenshall would owe if the districts consolidate, according to a recent tax impact study.
The study — conducted by Ehlers, the districts’ financial advisor — showed if the districts consolidate and spread existing debt from both districts equally, Carlton property owners with a residential property valued at $150,000 would see a tax increase of approximately $63, an increase of about 12% over the district’s 2020 levy. A similarly valued property in Wrenshall would see a decrease of $97, a drop of more than 14% over the 2020 levy.
In 2020, a Carlton taxpayer with a residential homestead worth $150,000 owed an estimated $505. In Wrenshall, the owner of a similar property owed $666, according to the study.
The two districts have negotiated for more than two years to develop a nearly $40 million facilities plan that would expand and upgrade Wrenshall School and South Terrace Elementary School in Carlton. Wrenshall would become the new middle and high school for the consolidated district and South Terrace would be the new district’s elementary school.
Ehlers estimated the tax impact for the facilities plan on a $150,000 residential homestead is $202, bringing the total tax increase for a homeowner in Carlton to $265 — a more than 50% increase over the 2020 levy.
A Wrenshall property owner with a similarly valued home would see an increase of $105, or about 40% of what those in Carlton would have added to their tax bill.
If the schools consolidated, but kept the debt levy based on the property’s location prior to consolidation, Carlton residents with home values of $150,000 would owe an extra $32 in taxes — or about 6% more than the 2020 levy — where Wrenshall residents would see a decrease of $53, an almost 8% drop. Combined with the facilities plan, a Carlton property owner would owe $234 extra in a consolidated district and a Wrenshall resident would see an increase of $149.
Ehlers’ estimates for the tax impact of the $40 million bond assumes voters in both districts approve the referendum and that lawmakers pass a legislative change to make school consolidations eligible for enhanced debt service equalization aid. Enhanced debt service equalization would require the consolidated district to take out the full bond amount, but the state would pay up to 46% of the annual bond payment. Currently, schools can only use the mechanism if there is a natural disaster. Officials in Moose Lake took advantage of the legislation after the old building was damaged in the 2012 flood.
The legislative part of that equation was introduced to the Minnesota Legislature by Sen. Jason Rarick, R-Brook Park, and Rep. Mike Sundin, DFL-Esko, but the bill did not advance in the regular session or any of the special sessions this summer.
Representatives of Carlton and Wrenshall have indicated they do not want to move forward on consolidation without enhanced debt equalization.
While the boards have typically split the costs associated with gathering information for consolidation, the Wrenshall board declined to contribute to the $2,500 cost of the tax impact study.
“I find this really very helpful for us to look at and it'll be really helpful for the Wrenshall folks to look at and for us to have some more concrete numbers,” Carlton board chair LaRae Lehto said at a special Carlton School Board meeting Aug. 18. “I know when we looked at the impacts of what a building bond would be, we kind of left this piece as a little bit unknown. So it's helpful to have this as we move forward.”
Wrenshall board member Janaki Fisher-Merritt said the results of the study aren’t surprising with the improvements going on at Wrenshall. In 2019, the Wrenshall School Board approved a $9.3 million health and safety bond to replace the heating, ventilation and air conditioning system — a change that resulted in a 43.8% tax increase for Wrenshall taxpayers in 2020.
“When it’s all said and done, we’re all paying the same,” Fisher-Merritt said. “Regardless of who’s going up or down, we’re all going to pay the same.”
Carlton Superintendent John Engstrom said the Carlton School Board has requested a meeting of the Joint Consolidation Referendum Committee and are waiting for a response from the Wrenshall School Board.
This article was updated at 10:20 a.m. on Sept. 3 to reflect the correct cost of the tax impact study. It was originally posted on Sept. 3 at 7 a.m. The Pine Journal regrets the error.