LCSD to raise taxes this fiscal year

 

Hughes, Wright, Barksdale

Hughes, Wright, Barksdale

 

 

Amanda Lien

 

 

After 30 years without raising taxes, the Lowndes County School District board voted Monday to ask the board of supervisors to raise ad valorem taxes by 4 percent -- the maximum allowed by state law without a referendum.  

 

The increase of roughly 1.3 mills -- about $609,000, according to LCSD business manager Kenneth Hughes' calculations -- would go toward a fund balance that is teetering on the edge of being beneath the state's recommendation that every school district carry 7.5 percent of its revenue in reserves at all times. 

 

Millage is figured into property taxes. A person who owns a $100,000 home without a Homestead exemption would see their taxes increase by roughly $16 annually. 

 

According to numbers provided to LCSD board members, Hughes estimated that, without the millage increase, LCSD would end FY 2020 with $4,014,037 in the bank. LCSD budgets operating revenue at about $60 million per year (which is the total that comes from local, state and federal sources), meaning the fund balance would sit right at that threshold. 

 

That was too close for comfort for the majority of the board, as well as Superintendent Lynn Wright, who was not present at the meeting but gave his recommendation via phone. But, though the tax increase passed with a 4-1 vote, it took LCSD board members almost an hour to come to that conclusion. 

 

Board members were divided on whether it was worth it to raise taxes when the projected fund balance was sitting right at the recommended percentage, or if the board should consider letting staff go or implementing a hiring freeze to ease the financial burden. Board member Brian Clark repeatedly checked Hughes' math on his phone calculator, pointing to projected figures and asking Hughes to clarify. Then, Clark, board vice president Jane Kilgore and board member Jacqueline Gray all asked what Wright's recommendation would be.  

 

"I want to hear what the superintendent's recommendation is," said Gray. "I don't know why he's not here, but I think we need to hear it from him." 

 

Gray turned to Assistant Superintendent Robin Ballard. "Did (Wright) give you any kind of recommendation to give to us?" she asked. 

 

After several moments, Ballard shook her head. "No, ma'am," she said. 

 

Gray then asked board president Robert Barksdale to call Wright on his cell phone. While Barksdale wheeled in his chair away from the table and microphone to speak to Wright in a low tone for a private conversation at the board table, the other four board members continued to discuss the benefits of raising taxes versus operating another year at a fund balance near to, but not below, the recommended percentage. It was only when Barksdale moved up to the table again to relay Wright's recommendation to the board that Gray and board secretary Wesley Barrett asked Barksdale to put Wright on speakerphone. 

 

"I recommend the board votes to raise the taxes the 4 percent," said Wright. "Based on the numbers from (Hughes) it is the best decision for the district." 

 

The board's policy to keep the district's fund balance at 15 percent has not been changed, despite the finances falling well short of that mark. 

 

 

 

An aversion to raising taxes 

 

Wright and Hughes, along with several other board members, knew there was a possibility that taxes would need to be raised this year to make up for a school district that has rapidly declined from a once-robust $17 million fund balance (operation fund reserve) in 2014. In FY 2019, the district operated at a roughly $2.5 million deficit, which led to LCSD cutting nearly 60 teaching positions for 2020. 

 

The millage rate currently sits at 46.71, even as consecutive years of deficits run in tandem with the district trying to pay off a $44 million construction bond -- at a rate of about $3 million per year for the 17-year note.  

 

The bonds, issued after voters approved a ballot measure in May 2015, built New Hope High School, a Career Tech Center on Lehmberg Road and paid for other capital improvements throughout the district.  

 

LCSD used its fund balance and lease-purchase agreements for a new $23 million Caledonia Elementary School, renovations at West Lowndes and a $2 million field house at New Hope.  

 

They did all of this, while district officials promised not to raise property taxes, instead depending on projected new tax revenue from businesses that would soon begin paying full taxes once their fee-in-lieu agreements -- which allow companies investing more than $100 million to locate to Lowndes County to pay only one-third of their property tax bill for up to 10 years -- expired.  

 

Some of the expected funds never came. Steel Dynamics Inc., for example, moved inventory to its tax-exempt paint shop, which led to the district receiving about $1.4 million less than expected in tax revenue for FY 2019.  

 

The latest fly in the ointment -- one that cost the district about $800,000 this year -- was a state Supreme Court decision that exempted all businesses located on airport property from paying any property taxes. The Legislature changed the law this year, which means Airbus, Aurora Flight Sciences and Stark Aerospace -- all located on Golden Triangle Regional Airport property -- will pay those taxes again next year.  

 

But much of the expected money did come.  

 

In 2016-17, LCSD collected $14.8 million from property taxes, Tax Assessor's Office records indicate, and operated at a $3.6 million deficit according to Hughes. The next year, mainly due to increased SDI taxes that were paid, the district collected $19.6 million in property taxes, but operated at a $2.1 million deficit. 

 

Wright, speaking to both LCSD board members and The Dispatch last month, remained hopeful that projected county tax collections of upwards of $20 million yearly would eliminate the need for a tax increase entirely. Wright did not respond to multiple calls from The Dispatch by press time for this report. 

 

 

 

'We can't have a shortfall' 

 

With the superintendent's recommendation made clear during Monday's meeting, board members resumed debating whether asking for a tax increase from the county board of supervisors was wise, given that raising taxes leads to poor community feedback and that the fund is projected to hover just above that 7.5 percent. 

 

Gray and Clark asked Ballard if there were any positions that could be eliminated without affecting the "positive progress" of the school district.  

 

"I can think of a couple positions that could, possibly, be eliminated, but in order for us to keep doing the positive things we're doing, it would be difficult," Ballard said. 

 

Kilgore, who was the sole vote against the tax increase, said she thought it was worth "tightening the strings" by eliminating personnel if it meant not raising taxes. 

 

"I hate raising taxes," she said. "It's so hard, and they are a burden to people. I hate to ask them to pay. If there are still cuts to be made, I'd rather do that than see taxes rise." 

 

Clark and Barrett both asked Hughes for his estimate on how LCSD finances would look in a year or two if the board did not vote to raise taxes. After hearing that would likely result in personnel cuts in order to stay above the state-recommended fund balance, Barrett made the motion to request the increase from the Lowndes County Board of Supervisors. 

 

"It seems realistic to do an increase now and then take it back if we have to," said Gray, who seconded the motion. "But we can't have a shortfall. I think realistically, it's best to do it that way."

 

 

 

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