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What is a Debt Service Levy?


Each year, dozens of Missouri school districts use bond issues to pay for school improvements. Since the bond is borrowed money that’s backed by the full faith and credit of the community, the community must have a plan for how to pay bond debt back. Enter the debt service levy.

Debt service levies are property tax levies used by communities to repay bonds. It’s common to see levy information written in cents-to-the dollar. For example, an Independence, Missouri bond issue was paired with a debt service levy of $0.85 to $1.

That doesn’t mean that property owners would have owed just $0.85 or $1 each if the bond passed. Instead, it meant that property owners would owe $0.85 or $1 in taxes for every one hundred dollars of value that their property was assessed at. That particular bond was for $85 million in capital projects for the district.

What does that look like for the average taxpayer?

It means that if the final debt service levy was $0.85, then a property with property assessed at $50,000 would owe $425 per year in property taxes toward the debt service levy. That tax would help the district to repay the $85 million bond that helped improve its schools.

Learn More: Read Missouri’s Law Governing Tax Levies and Bonded Indebtedness.

Note: Most districts are required to set and publish their tax rates by September 1st. Other districts are required to report by October 1st.

To continue to learn more about how your taxes affect public school funding in Missouri, please bookmark Missouri Parent News and connect with us on Facebook and Twitter. Have a topic you’d like to hear more about? Let us know by leaving a comment here or on Facebook.

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