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Caught between tax rate hike and future budget cuts

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School board debates 4 percent revenue increase

By Meaghan Downs

The school board’s “back is against the wall,” board vice president Scott Brown said, as it deliberates between two unpopular and difficult choices to sustain district services: raise taxes or cut program spending.
 “You can’t make something out of nothing,” Brown said as the school board debated during a work session on tax rates held last Thursday night. “We’ve got to get money somewhere.”
The school board has chosen to take a flat tax rate for the last four years, and that rate, at $5.52 per $1,000 assessed value, totals $8,080,416 in anticipated revenue for the upcoming fiscal year.
A compensating rate, at $5.54 per $1,000 assessed value, would increase real and personal property taxes by $2 on each tax bill, and provide an additional $30,000 in revenue for the district.
The 4 percent revenue increase rate — the tax rate set to increase overall district revenue by 4 percent — was calculated at $5.76 per $1,000 assessed value.
That means a home assessed at $100,000 would see its property taxes go from $552 to $576, an increase of just over 4 percent.
According to rate calculations provided by Finance Officer Nick Clark, total revenue gained from a 4 percent revenue increase would be $8,431,739 for real and personal property, roughly a $350,000 increase (excluding new property) in revenue compared to the flat rate.  
A public hearing is required if the board chooses a 4 percent revenue increase rate.
An additional tax rate calculation known as “other” or subsection rate, at $5.84 per $1,000, would also be subject to a public hearing since it is higher than the compensating rate. It would also be subject to a recall by petition as that rate is higher than the 4 percent revenue increase rate.
Because tax rates are calculated based on the previous year’s rate selection, Finance Officer Nick Clark warned the school board that if it continued to select the flat rate at $5.52 per $1,000, the district would lose out on future tax revenue.  
“You lose that money forever, with not taking the 4 percent, we’ve lost those revenues forever,” Clark, who later estimated that the district has lost $2.5 million by not taking a 4 percent revenue increase since 2009-2010, said.
“And we’ll never be able to gain that money back.”
School board member Roger McDowell said he had a completely different outlook on the way taxes work, and unfortunately, many school districts feel they’re supposed to raise taxes.
“In my opinion, it ought to be illegal to raise tax rates. I’ve said this many times, raising tax rates takes a bigger chunk of what you earn,” he said.
“This is just discussion, but how else are we going to increase our revenue?” Clark pressed.  “Other expenses —“
“I didn’t say that was the way to do it—“ McDowell answered.
“The question is, how do we do it [raise revenues] as a school district?” Clark said.
“That’s the whole problem though,” McDowell said. “The daggone government right now is they can’t spend within their means. They spend more than they make every darn year, that’s why our country is broke, that’s why Detroit is broke. That’s why if we don’t do something, we’re not going to have a government.”
Drury said she’s spoken with her constituents, many of whom don’t want the board to raise taxes, and feels that she needs to represent their interests.
“And I know to a lot of people, this increase doesn’t sound like much … but I just have to go with what my constituents feel,” she said.
School board president James Sargent voiced his worries about not having enough revenue to sustain district programs and keep Anderson County teachers.
“I do not want to see our school system going downhill and dropping programs and teachers,” Sargent said.
School board member Lee Hahn later mentioned the imminent purchase of a new and potentially expensive heating and cooling system for the high school, estimated to cost about $2.5 to $3 million. The board does not have the bonding potential available at the moment, and that system may go out any day now, Hahn said, which doesn’t leave the district much time to replace it.
Anderson County residents don’t like taxes, he said, but they also want new blacktop.
“It’s sort of like they want their cake and eat it, too,” Hahn said. “That being said, someone, somehow someday is going to have to say no [to spending].”
“We’ll have to do what we need to [do to] sustain this school district to the best of our ability.”
McDowell said the board needed to look at the bottom line: what would happen if the proposed budget could be reconfigured without basing it on a 4 percent revenue increase. How taking out that anticipated increase in revenue would affect the district’s contingency percentage.  
The state suggests school districts keep their contingency funds at a minimum 2 percent. Clark, in the budget calling for a 4 percent revenue increase, has the district’s contingency fund at 2.13 percent.
“We’ve got to cut spending or raise revenues. We’ve got to keep an adequate contingency,” McDowell said. “If we don’t raise taxes, we’ve got to make decisions on what we’re spending money for, what needs to be cut.”
“Tell me, what are we going to cut?” Sargent said. “I don’t know what else we’re going to cut.”
Money will have to come either from cutting program spending or raising tax rates, a choice, McDowell said, will be a hard one for the board to make.
“People elected us to manage that, we need to manage it one way or another, whether we have to make the hard choice to raise taxes, or make the hard choice to cut spending,” McDowell said.
“That’s what we signed up for,” he said.
Hahn agreed.
“That’s what we’re here for,” he said.
No action was taken during last Thursday night’s work session.

Want to go?
The school board will meet Aug. 26 at 7 p.m. at the Anderson County Board of Education office, located at 1160 Bypass North.
As of press time, it was not determined if tax rates would be on the agenda for the regularly scheduled monthly meeting.
If a hearing is scheduled for the public, it will be held either Aug. 28 or Aug. 29 depending upon the schedules of each board member.