For first time in many years, rate to dip below state-allowed maximum of 20 mills
The Fayette County Board of Education is expected to ease the tax burden on property owners a bit by reducing the millage rate by one-quarter mill below the state maximum. Even so, the rate, once approved later this month, will represent a tax increase.
The school board on Aug. 15 voted 5-0 to advertise a millage rate of 19.75 mills, down from the 20-mill rate in effect for the past several years. The vote came after one maintaining the rate at 20 mills failed on a 2-3 vote, with board members Leonard Presberg and Dan Colwell voting to keep the 20-mill rate.
The board at the outset of the discussion was provided with two potential rates, 20 mills and 19.75 mills.
Based on a home value of $250,000, the 20-mill rate would mean a $109.96 increase in school property taxes while the 19.75-mill rate would increase taxes by $85.46.
A rollback to neutralize any increase would have to be 18.878 mills. One mill equals approximately $4 million in tax revenue, according to Assistant Superintendent for Finance Tom Gray.
Chairman Marion Key began the discussion saying the millage rate could be reduced to 18 mills.
Superintendent Dr. Joseph Barrow dissented, citing the uncertainty of funding coming at the next session of the General Assembly. He said the motion could set the rate at 20 mills with the board able to discuss the 19.75-mill option during the public hearings.
“Twenty mills is too much,” responded board member Barry Marchman, noting that the board maintained a 10 percent, or $19 million, reserve and adding that the school system has several million additional dollars on hand for capital transfers and projects. “How much cash is needed before we rollback the rate?”
Board member Diane Basham entered the discussion, agreeing with Marchman.
“We’re conservative with spending money,” Basham said, suggesting that the board consider a one-mill reduction. “I believe we’re kind of hoarding money. We have a nice reserve and capital funds. When do we start giving money back to the taxpayers?”
Presberg responded, saying the community wants money spent on schools.
“Taxes are not scaring people away from moving here,” Presberg said in advocating for keeping the rate at 20 mills. “I think that’s what the community wants.”
Colwell then spoke, saying he would be cautious about lowering the rate.
“We’re no where near meeting the needs. We can’t even pay bus drivers enough,” Colwell said, referencing a discussion earlier in the meeting on the difficulty in Fayette and other communities in hiring sufficient numbers of bus drivers due to the low pay.
Colwell said he believed the board should keep the idea of reducing the millage as an option, though not this year.
“It sounds good (to lower the millage rate), but it’s not the wise thing to do,” said Colwell.
The discussion, prompted by Basham, turned to the trend in recent years that shows the budget at a break-even position or one that projects a small deficit at the end of the year. Yet due to the conservative posture taken by Gray, the system at the end of the year usually results in being several million dollars in the black.
“If we go (down) by one mill we would be underfunding the budget we adopted by $5 million,” Colwell responded.
It was noted that even with a 20-mill rate, tax collections would generate approximately $500,000 less than the amount budgeted.
“I think we will come in at or under budget, but we have to watch the dollars closely,” said Barrow. “I think we’re just about to get balanced. We could do something with the millage (decreasing it to 19.75 mills) but we shouldn’t do more.”
The vote came on the original motion to adopt a 20-mill rate. That motion failed on a 2-3 vote, with Colwell and Presberg voting in favor and with Key, Basham and Marchman opposed.
A new motion setting the rate at 19.75 mills followed.
During the subsequent brief discussion Marchman said the school system has $28 million in reserves and other funds, adding his belief, based on recent experience, that the year-end fund balance next June will grow to $8-12 million by that time.
“But we’ve probably got $100 million worth of needs,” Colwell said, adding that the school board recently approved the budget.
“Last year we budgeted a deficit and made it up in a matter of months,” Basham responded.
Adding a last word before the vote, Marchman said, “It would make me happy if we stop extracting the maximum amount (20 mills) from the taxpayers that’s allowed by law.”
The vote to advertise the 19.75-mill rate for the public hearings was unanimous.
All concerned citizens are invited to the public hearings on this tax increase to be held at the Fayette County Board of Education building located at 210 Stonewall Avenue in Fayetteville on Aug. 24, at 11:00 a.m. and 6:30 p.m. and Aug. 31 at 6:30 p.m.
The millage adoption is scheduled to occur Aug. 31 at 7 p.m. during a called board meeting at the location listed above.
