County’s real estate tax rate raised by 13 cents for middle school

Two-thirds of voters last November cast ballots in favor of a new middle school – even if it meant as much as a 13-cent increase in the county’s real estate tax rate.

Monday night the Board of Supervisors did exactly what a majority of voters authorized them to do, and raised the county’s real estate tax rate from 64 cents per $100 of assessed value to a new rate of 77 cents.

The rate was approved on a 4-1 vote, with Robinson District Supervisor Charles Bopp voting against the increase.

County Administrator Jonathan Sweet said, in laying out the argument for raising taxes that the increase comes at a time when supervisors and county staff are still involved in developing a balanced budget for the 2018-19 fiscal year.

“The school board just tonight approved a budget that requests a 10 percent increase in operations funding, so we’ve got to plug that amount into our budget figures,” Sweet explained.

He added budget work still to do included getting a better understanding of what capital needs are for the schools and plugging in debt service figures for the new middle school.

“During the referendum we told voters there was a potential for a 9- to 13-cent increase in the real estate tax levy to generate approximately $3.25 million annually in new revenues to service the debt for the school over 20 years,” Sweet said.

He said there were a variety of ways to service the debt.

“We could have gone as low as a 9-cent increase, but the cost of doing that meant amortizing over a longer period of time, which would have cost the county a lot more in interest over more years.  We took the least costly method to serve the $47 million cost of the school,” he said.

Noting that 50 percent of the county’s expenses go toward education, Sweet said the cost to the county in principal and interest for the new middle school will hit $63.8 million by the time it is paid off.

Sweet said voters in November made four decisions with their vote, and all four were incorporated into the explanation of the referendum.

“They decided to build a new middle school, to consolidate the two old middle schools, to build the new one on the site along Route 11 and to raise taxes to service the debt,” Sweet explained.

Sweet noted the county had recently for the first time engaged in a financial forecast, projecting its finances for the next five years. The forecast took into consideration items such as operational costs, inflation, revenues, county capital needs, the school system’s operational costs and its capital needs.

He said a 90 cent tax rate would be needed to cover all the expenses facing the county, and that high a rate would not be acceptable.

“The board has determined we are not going to tax the citizens of Pulaski County for everything we need or want,” Sweet stated.

Sweet said now, with the school board seeking an additional $1.4 million in operations funds, that amount would have to be put in the forecast, which had been created assuming level funding for education next year.

A public hearing on the rate increase saw five citizens speak.

E.W. Harless of Dublin said he had supported the middle school project. Harless continued that some debt service the county pays now on school projects will in the next few years be eliminated.  He wondered if the money saved would be spent on maintaining the rest of the county’s schools.

Cloyd District Supervisor Joe Guthrie explained that the current board could not encumber future boards.

“It’s impossible for us to say what other boards will do,” Guthrie said. “What we chose to do is not let that money pay for the new middle school.  It will be fully funded by the tax increase of 13 cents.  So that future debt service will be available.”

Board Chairman Andy McCready, Massie District, said speaking only for himself he believes the county needs to be more pro-active in making regular investments in school and county facilities.

“I think we need to continue making investments,” McCready said.  “That’s not to say that tax rate of 77 cents – if we see growth in real estate tax revenue and growth in machinery and tools tax revenue – that we might not see that rate come down some.  I’m worried about being competitive with the counties around us.  Floyd County’s tax rate is 54 cents. We don’t want our tax rate to be ‘Montgomeryized.’ We cannot afford an 89-cent rate in this county. We just can’t.”

McCready said his hope is the county can perform some major “up-fits” every few years.  “Go in and make some major investments. I think that’s critical … for school and county facilities.”

Sweet interjected the school board’s request for an additional $1.4 million in operations funds would eat up 6 cents of the 13-cent tax rate increase. Plus another 1.5 cents would be needed just for school bus replacement.

“And there’s capital needs on both sides of the street (county and schools),” said Sweet. “We didn’t anticipate a $1.4 million request in operations on top of the 13-cent tax increase for the middle school.”

McCready said there’s still a question what the state will ultimately do on funding for next year.

He added that, “whether you’re for Medicaid expansion or not,” county officials from around the state had been told that even without an expansion of Medicaid – which the state continues to struggle over – by 2024 state spending on Medicaid will exceed what the state pays for K-12 education.

“They normally factor in a 3.5 percent growth in costs, and Medicaid is growing by 7.5 to 8 percent annually,” McCready said.

“There’s a lot we’d like to do, but our hands are tied by the state not taking care of business,” McCready concluded.

Laura Bullard asked the board what would have to be done to prevent the county from having to eventually raise its tax rate up to 90 cents.

“There are two ways to raise revenue to pay the bills. Either raise taxes or you better be growing,” McCready said. “Raising taxes is never a good way because we have people who have difficulty paying their taxes.”

McCready said where the current board and boards before it have worked to raise revenue is through new growth. That has resulted in an increase in machinery and tools tax revenue.

“But we’re not seeing good growth in real estate,” he said. “We need to see growth going a little more, so the board has been working with our economic development folks to drive more growth in a number of different sectors.”

Sweet added it would help if there were more people paying taxes.

“Something beautiful happens when job opportunities meet housing opportunities and our population grows,” Sweet stated. “Instead of growing fewer and growing older, there are more of us and we’re growing younger and there’s more people contributing to the local economy.”

Sweet said he believes the county can support 40,000 to 42,000 people without having to build new schools, buy new school buses, run more water and sewer and without having to hire more law enforcement officers.

“That would be more people helping to carry the burden of what we already have,” he said.

Sweet said the county has to continue to create the environment suitable for the creation of more jobs.

Guthrie said that was one of the main reasons in the first place for building the new middle school, so that more people who may have rejected the idea of living in Pulaski County because of the two old middle schools could now reconsider moving here and raising a family.

Bullard asked if the county could levy different taxes, such as “user” taxes rather than falling back onto real estate.

Sweet and McCready explained that Virginia is a Dillon Rule state, which means localities can only tax what the state government allows.

It was noted that for the third time efforts to gain local authority to tax tobacco products had failed in the General Assembly.  Only two counties in Northern Virginia and the state’s cities have such taxing authority.

Sweet said a lobbyist is being hired and the localities seeking the tobacco tax authority will work for its passage again next year.

Annette Caldwell of Draper questioned the board about whether farmers pay the same rate of taxes as other citizens.

McCready said farmers pay the same rate as everyone else, but their farm land is taxed at a different value – $520 per acre.  However, they pay the same value and rate for their home as everyone else.

Guthrie added that, as a farmer, he also pays business taxes on his farmland.

Mike Miller of Newbern questioned the board about uncollected delinquent taxes.

“The county collects those taxes eventually, plus penalty and interest,” said McCready. “Even if the county has to sell the property to collect the taxes.”

Some properties, however, aren’t sold because the county wouldn’t want to own them and wouldn’t be able to sell them.

“Properties such as EPA Superfund Sites,” McCready said.

“We’ll get the money, we’re just delayed in getting it,” Sweet said.

School Board Chairman Timmy Hurst questioned a portion of Sweet’s presentation on the budget which had education funding topping $20 million.

“I believe this year’s funding for schools was $14.6 million,” Hurst said.

Sweet responded that in the past the county hasn’t done a very good job of reporting the true cost of education.

“There are a litany of things the county spends money on for education that isn’t passing through the school board’s coffers,” Sweet responded. Examples he gave included School Resource Officers and new accounting software the school system will benefit from.

By Mike Williams, The Patriot

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