September 14, 2019 10:03:54 PM
Property tax rates are dropping for Lowndes County and its school district after the tax assessor's office changed the way it will tax a local power plant.
Tax Assessor/Collector Greg Andrews told Lowndes County School Board members Friday the district could lower its tax rate to 46.65 mills and still collect its requested $21,655,000 from local real and property taxes. That's 0.06 mills less than the 46.71 LCSD has levied in previous years, and a reversal from the 47.41 -- a 0.7 mill increase -- the board had planned to levy for Fiscal Year 2020.
Likewise, the board of supervisors adopted a 43.26 mill rate for FY 2020 on Friday, down 0.75 mills from the 2019 rate of 44.01.
Mills are used to calculate property taxes. Andrews said the new rates would combine to reduce the tax bill for a county taxpayer with a home valued at $100,000 by about $10. For a business valued at $100,000, it would drop about $15, he said.
By assigning a new tax code to Caledonia Generating, Andrews said, the county gained a total of about $1.2 million in projected tax collections for Fiscal Year 2020 that will be split between the county and LCSD according to their respective mill rates.
All taxpayers had until Sept. 3 to appeal their assessed tax rate, and Caledonia Generating did not.
Caledonia Generating, a peaking power plant that exports power to the Tennessee Valley Authority and Alabama Power, invested $300 million in its plant in 2007, Andrews said.
Under a fee-in-lieu agreement -- which allowed the company to pay one-third of its full taxes for 10 years -- it paid about $2 million annually. In 2018, the first year it was assessed full taxes, the company paid about $3.27 million.
Originally, it was coded as a basic power plant, which allowed it to be depreciated at a faster rate. A new employee in the tax assessor's office, Peter Russell who came to Lowndes County in February after working for Lauderdale County, found the issue and began looking into recoding the business.
"It wasn't that anybody did it wrong exactly," Andrews said. "It was that there were three different options on depreciation you can take. One was for a basic power plant, but when we started looking, the code we are using now actually describes that power plant."
The originally used code would have depreciated the plant to 40 percent of its original value for 2020. The new code, which Andrews said the Mississippi Department of Revenue and Internal Revenue Service both verified was appropriate in this instance, depreciated it to 77 percent of original value. That bumped the taxes the company owed to more than $4.4 million and raised the projected value of 1 county school district mill from $457,000 to $467,000.
LCSD, which has operated at deficits for the last few years, planned to ask for a millage increase to raise roughly $300,000 and start rebuilding its operating fund balance.
Its $21.6 million request from local tax sources -- from which the mill rate is set -- was about $3 million more than it generated in 2019, when a mill was worth roughly $400,000.
A higher mill value means it takes fewer mills to generate the same amount of tax revenue, leading to the rate decrease.
The district has also cut spending, primarily through eliminating 64 teaching positions for this school year.
"I'm not opposed to raising taxes when it's needed, but I believe we have to do our due diligence before we ask for a tax increase," LCSD board member Brian Clark said. "We've made some headway cutting expenses, but there's still more work to be done.
"The fact we don't have to raise taxes is mostly attributable to Greg Andrews and his office," he added. "The (school) board can't really take all the credit."
On the county side, the board of supervisors raised property taxes by 2 mills last year, in large part to defray revenue loss from a 2018 Mississippi Supreme Court decision that exempted businesses located on airport property from paying any property taxes.
The Legislature changed the law in 2019 and returned more than $800,000 in tax collections from Golden Triangle Regional Airport-based companies back to the books.
With that, the board of supervisors had already planned to reduce 2020 millage by a quarter-mill, but the Caledonia Generating code change helped reduce the rate more.
"We made a commitment last year, when we raised the millage, that we were going to eventually pay it back to the taxpayers," board of supervisors president Harry Sanders said. "This is the first installment of that, and I believe we can remove the remaining 1.25 mills by (FY 2021).
Zack Plair is the managing editor for The Dispatch.
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