News Column

County Council raises school tax rate, district officials contend it still won't be enough

August 26, 2014

By Zach Murdock, The Island Packet (Hilton Head Island, S.C.)



Aug. 26--State-owned utility Santee Cooper has approved a $4 million loan to help Beaufort County build a 40,000-square-foot building in the Myrtle Business park in Bluffton.

The undeveloped lot behind the county's government center on Bluffton Parkway near S.C. 46 already has utilities installed there by a previous owner. The county and Lowcountry Economic Alliance intend to use the building to entice businesses to relocate to the area.

The county purchased the 7.7-acre lot late last year for $1.15 million, which was covered in part by two economic-development grants from Palmetto Electric Cooperative and Hargray Communications. The full project is expected to cost $7.5 million, including the $4 million loan.

Propery tax rate raised for schools, but less than district sought

As another school year begins, Beaufort County schools could be staring at another deficit.

County leaders voted to raise the property-tax rate for schools Monday, but by less than half the rate school officials had requested.

That means the school district likely will face about a $2 million deficit this year, school leaders estimate. In the spring, a $4 million deficit forced the district to freeze hiring and go into its savings.

"It's essentially a mid-year budget cut," superintendent Jeff Moss said. "Without looking at the numbers, I don't know where that will come from. But I don't want to use my fund balance two years in a row."

Beaufort County Council unanimously approved, with Councilman Bill McBride absent, to adjust the tax rate to 103.5 mills to raise $114.9 million for county public schools at its meeting on Hilton Head Island. That's an increase over the 101.7-mill rate the council set in June.

For a $200,000 second home, the rate will mean a $1,224 tax bill -- a $54 increase over last year.

However, county and district finance staff have since calculated that more than 105 mills would be needed to raise $114.9 million to account for variations in the county's tax collections.

Members of the council's Finance Committee discussed those calculations with school officials at a meeting earlier Monday afternoon.

Council members Brian Flewelling and Stu Rodman countered that increase would be too steep after last year's 97.45-mill rate for schools. Instead, Rodman suggested the 103.5-mill rate as a compromise.

The difference in the three mill-rate calculations stem from how each addresses variances in the county's tax collections and the number of residents declaring Beaufort County as their primary residence. Under a state law called Act 388, primary residences aren't taxed for school operating expenses.

The 101.7-mill rate unrealistically assumes 100 percent tax collection and wouldn't raise enough, according to county chief financial officer Alicia Holland and district head of operations Phyllis White. A rate of about 105 mills would account for fewer collections and trends in residents switching to owner-occupied homes and could raise the full $114.9 million, they said.

Flewelling, Rodman and Councilman Rick Caporale argue the 103.5-mill rate falls safely in the middle. They say it conservatively accounts for those variations, which they argue will be smaller this year, and the district can use its reserve fund to make up any shortage that occurs.

However, school officials strongly expressed concerns to council members about using reserve funds to pay for recurring costs, such as teacher salaries.

Last fiscal year, the council lowered the school millage rate, and the district was inadvertently shorted about $4 million. That led the district to cut some positions this school year and hold others open, in addition to using more than $2 million from its reserve fund, White said.

Based on initial calculations of the 103.5-mill rate, Moss and White think the school district will need to cut about $2 million from its current operating budget.

Although the final vote was unanimous, the millage setting divided council members. Chairman Paul Sommerville and council members Gerald Dawson, Laura Von Harten and Steve Fobes argued the council has to set whatever rate will raise the amount it appropriated for the district.

"Knowing what you went through last year, this, to me, is a slap in the face," Von Harten said.

The full council's first vote to adjust the rate to 103.5 mills ended in a 5-5 deadlock, killing the motion and leaving the school rate at the too-low 101.7 mills. Knowing that, Von Harten asked the council to reconsider and changed her vote to ensure the district received at least some increase in revenue, she said. The remaining council members followed suit, this time voting unanimously for the 103.5-mill rate.

Follow reporter Zach Murdock at twitter.com/IPBG_Zach.

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(c)2014 The Island Packet (Hilton Head, S.C.)

Visit The Island Packet (Hilton Head, S.C.) at www.islandpacket.com

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Source: Island Packet (Hilton Head, SC)


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