Since the turn of the millennium, Lowndes County has seen something of an industrial revolution. Over the past two decades, we’re seen the arrival of steel mills, heavy manufacturing, aerospace technology and, most recently, solar power facilities.
In each of these cases, as an incentive for coming to the county, fees-in-lieu have been an important tool. These fee-in-lieu agreements allow companies to pay only a third of their assessed taxes for the first 10 years, after which they would be responsible for the full assessed value of their facilities.
During the negotiation phase, county supervisors essentially had the proxy vote of the school district. School officials implicitly agreed to capture only a third of the assessed taxes they are entitled to for that period.
Each year, county schools may request additional funding up to 4 percent of the previous year’s budget without requiring voter approval. Any new property built in the county also results in additional funding without voter approval.
Last year, as some fee-in-lieus rolled off, LCSD requested their 4 percent increase plus the taxes from the industries whose fees had expired, claiming those properties as “new property.”
County supervisors denied that request, saying the $3 million from the expiring fee-in-lieu was not new property — the industry has been there for 10 years, after all. Instead of approving the $27 million LCSD requested, supervisors only granted them $24 million.
LCSD filed suit against the county, claiming that expiring fee-in-lieus should be counted as “new property.”
Friday, almost a year after the suit was filed, Chancery Court Judge Rodney Faver issued a ruling siding with the school district. The ruling concluded LCSD was entitled to claim tax collections from companies with expiring fee-in-lieu agreements as “new property” without it counting against the state-mandated caps for how much local ad valorem taxes a school district can request year-over-year.
The ruling is an important one and, we believe, a sound one as well. A ruling for the county would have seriously undermined the fee-in-lieu concept, which had always been intended to be in effect for a limited period of time, not in perpetuity.
Supervisors have the option of appealing Faver’s decision, but we hope they don’t. An appeal would not be in the best interest of the county, the school district and, most importantly, the taxpayers of Lowndes County. The additional time, not to mention the expense incurred by attorney’s fees, will only aggravate the issue. As it is, the county will have to reimburse the school district for the $3 million withheld last year. A county tax increase will likely be required to repay those funds.
Faver’s ruling should be considered the last one on this subject and be used as a model when other fees-in-lieu roll off.
There is at least one promising aspect that has emerged in the dispute between the county and the school district. Board of Supervisors President Trip Hairston met with LCSD Superintendent Sam Alison privately then attended a LCSD budget meeting the day before the judge’s ruling where he struck a conciliatory tone.
Hairston, who was elevated to board president just as the suit was being filed last year, has sought compromise rather than conflict, which is really the best approach.
We appreciate Hairston’s efforts to listen and to understand the school district’s position as well as his efforts to find a solution. These kinds of disputes are not zero-sum games. Both supervisors and school officials serve the public interest.
We urge supervisors to accept Faver’s ruling and work with the school district to resolve this funding issue. We believe also that compromise requires the school district to reexamine its position to see if there are ways a tax increase to recover those withheld funds from last year can be mitigated.
This will require a good-faith effort by both parties.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.