The Nebraska City School board held a budget hearing Monday where finance committee members hailed a reduction in the property tax levy and "spectacular" reductions in tax asking as the middle school bonds are paid off.

The school's $19 million budget includes a lower property tax levy, reduction in debt, 3.5 percent salary increase, and wireless technology to school builidngs.

The Nebraska City School Board held a public hearing for its 2014 budget Monday that includes a reduction in the property tax levy that Tom Farrell of the school's finance committee called spectacular.

The levy decrease will save the owner of a $100,000 house about $60 a year, but Nebraska City taxpayers should see a greater reduction over the next two years as the middle school bonds are paid for.

When the middle school was voted on only property in Nebraska City and vicinity was taxed because much of the rural area was included in Class I rural school districts. The reduction of the tax levy for the bonds will show up on Nebraska City tax roles, but not on rural areas that never paid the tax.

The middle school bond payments are expected to drop from $581,763 this year to $299,280 in 2013-14 and drop to zero as the bond is paid off the following year. Levy will drop about 6 cents this year and another six cents the next year.

"It's a spectacular drop in the levy," Farrell said.

A proposed levy of 1.31 would be the lowest since 2007.

The school proposes a $19.9 million budget, which is an increase of 2.14 percent. The overall budget includes $100,000 for the new pre-school, which is being paid for by grants. It also provides for a 3.5 percent increase in staff salary and benefits.

The school expects $3.3 million in state aid, an increase of $200,000 over last year, and $600,000 for motor vehicle taxes. The overall property tax requirement is $10.2 million. The property tax requirement increases about $400,000, but the levy is dropping due to higher property valuations. Valuations rose 6.25 percent in Nebraska City and 5.88 percent in the overall county.

John Crook of the building and grounds committee said rural landowners will pay more in taxes next year because of higher valuations and because they do not benefit from reduced bond payments for the middle school.

The budget also includes, for the first time, a technology levy. The board expects to collect $100,000 to install wireless communications starting with the high school and middle school.

The budget also includes $150,000 to begin to replenish the school's building fund.

Farrell said this year's budget also includes debt reduction up to $500,000.

"We will be able to see reasonable debt reduction," he said. "If you've got debt, it means you're paying interest and interest doesn't help the classroom. When we reduce the debt, we can focus our resources on what is going on in the classroom," Farrell said.

The board also approved a measure to increase budget authority by $223,000.

Superintendent Jeff Edwards said the school has $3.2 million of unused budget authority now because of changes in how the state calculates it, but noted that there was only about $20 four years ago.

Crook said authorizing the budget authority means, if the state increases state aid to schools, Nebraska City would have authority to spend it.