September 16, 2020 11:06:21 AM
On Tuesday, the Lowndes County Board of Supervisors announced its intentions to take the county's school district to court in a dispute over how much money should be appropriated to the schools for Fiscal Year 2021.
But if you are looking for the responsibility party in this dispute, the focus must shift to Jackson, where state officials -- primarily the Legislature and the Attorney General's Office - set the stage for the disagreement long, long ago.
The key factor in this dispute is how ad valorem tax revenue, which funds both county operations and the school district, are calculated as it pertains to an economic development plan passed by the Legislature more than 30 years ago.
The 1989 Economic Development Reform Act was established to help the state attract new industry though an incentive that would allow new companies valued at more than $60 million to pay only a third of their taxes for a period of up to 10 years under a fee-in-lieu provision. After that, the company would be required to pay taxes based on its assessed value.
Now, 30 years later, the ambiguity of that legislation has manifested itself here in Lowndes County.
For the average person, it's a pretty complicated matter. In short, the disagreement is whether or not the school district's request for a funding increase is within the established parameters (districts can request up to a 4 percent increase without challenge). Increases beyond 4 percent could be rejected by the supervisors or require voter approval, should the request exceed a 7 percent increase.
How that percentage is calculated is the big question, one that revolves entirely around how the revenue from an expired fee-in-lieu agreement should be evaluated.
Revenue from "new property" doesn't count in calculating the percentage of increase requested, so the question becomes: Is a business that has been operating in the county for 10 years, operating under a fee-in lieu agreement, rightly considered "new property?"
The supervisors argue that a business under a fee-in-lieu agreement cannot be considered new since that company was assessed and added to the tax rolls at the time the fees-in-lieu agreement was signed. In fact, the only way to determine the one-third payment a company would pay is to assess it for tax purposes.
That argument is reasonable, certainly.
But so is the school district's argument.
In fact, the phrase "fee-in-lieu" makes a pretty good argument when you consider this salient point: Fee in lieu ... of what? There's only one answer: Taxes. The term itself suggests that there is a material difference between a fee and a tax.
It is on that basis that the school district hangs its hat. For 10 years, the county may have collected fees, but when a fee-in-lieu agreement ends, it is only at that point that the revenues collected from a company become taxes. For all practical purposes, that's "new" tax revenue that replaces an "old" fee.
Our view is that either position is reasonable. It is also our view that the state bears the responsibility for clarifying which view should govern how these revenues are classified.
One thing everyone should be able to agree on is that this is not a dispute we should be having more than 30 years after the state's fee-in-lieu program was implemented.
Let's get this fixed now.
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