Scenario: Last week in responding to requests from the CFT – Commission on Fiscal Transparency – you discovered that, with the 10% State aid cut and your district’s subsequent loss of $5,848,117.98, you will not be able to maintain your current budget without letting taxes go up much more than 2%, the State cap on property tax increases. Refer to the following:
Your Three Sources of Revenue before the 10% Cut in State Aid and 2% Property Tax Cap
Source Amount Percent
Local Contribution $44,494,020.00 40.62%
State Contribution $58,481,179.81 53.38%
Federal Contribution $6,572,885.09 6%
Total Budget $109,584,084.90 100%
Your task: Assume that local property taxes are allowed to increase at the maximum 2% to partially offset the 10% State aid cut. Your job is to build on your prior work and expand your previous PowerPoint presentation to calculate the following:
1. The new local contribution given the 2% property tax increase cap.
2. The new state contribution with the 10% State aid cut.
3. The new total budget given the 10% State aid cut and the 2% cap on the property tax increase.
4. The reduction in your budget resulting from the 10% State aid cut and the 2% property tax increase.