McCready offers look at county’s finances

A number of our citizens have asked me to review our County’s finances for them. I will go over our present funding and then address how Pulaski County would look if the school bond referendum passes.

I have had the honor of serving on the Pulaski County Board of Supervisors, representing the citizens of the Massie District, for the last six years. I have worked hard to watch our budget closely and ensure our tax dollars are spent wisely. No one likes higher taxes or wasted money.  Our citizens want to know if taxes go up, what is the reason and how long will the increase last.

Counties in Virginia have two ways to fund capital projects. First, we can pay cash out of the Operating Budget. This is used only if the cost is small enough. For big ticket needs, counties will obtain a loan. However, for governmental needs, rather than “loans” or “mortgages,” the debts are called “bonds.”

Pulaski County’s Existing Spending

Many areas of your local government functions are funded by the county budget. Schools are our largest cost by far at 30 percent or more. Also funded from the Operating Budget are Social Services, the Sheriff’s Office, county recreation, volunteer fire departments, rescue squads, and many others.

In the six years I have served on the Board of Supervisors, we have increased funding for school operations each year.  The taxpayers of Pulaski County, through the Board of Supervisors, have increased local funding to the schools approximately 22 percent over the last six years. This increased amount is over 2.5 million dollars. Local funding for school operations for the current year is $14,944,034.  Approximately $200,000 is special State carryover funds, so total local dollars are $14,744,000. This is money the School Board uses to help pay teachers, administrators, insurance, maintenance and teachers’ retirement. During the same six years, according to State reports, enrollment in Pulaski County schools has dropped by 10 percent.

School Enrollment

The number of students we educate has a bearing on the school system’s needs for operating expenses and buildings. As best I can tell, in the late 1980’s our schools educated about 6,000 students. According to State reports, by the 2006-2007 school year Pulaski County’s total enrollment has dropped to 4,914 students.

The projected enrollment for this year is 4,021.

During this period of time, we closed four elementary schools (Claremont, Northwood, old Riverlawn and Newbern), but we have built Pulaski Elementary, new Riverlawn Elementary and expanded Dublin Elementary.  All counties in southwest Virginia are seeing declining school enrollment. We could have a whole separate story on this issue.

Existing County Debt

Pulaski County has the following long-term school debt: Critzer Elementary, Dublin Elementary, Pulaski Elementary, Riverlawn Elementary, Snowville Elementary, and Pulaski County High School (renovations).

Non-school debt includes economic development debt related to the Bob White Boulevard facility, James Hardie, and upcoming Phoenix Packaging.

Total current debt load for the county is $31,181,954. Of that amount, 85 percent or $26,378,676 is directly related to the schools. The annual payment for school debt is $2,943,743. The soonest school debts to be paid off are projected to be in 2023.  The way the bonds are structured, each year our annual payments decrease slightly so we will see a little savings in upcoming years.

When we look over the additional projected capital needs from the School Board, the amount is almost $19 million. Only $3.8 million is related to the existing Dublin and Pulaski middle schools so that means the School Board sees almost $15 million in major repair and renovation needs over the next 8 – 10 years.

Projected County Debt

If the School Bond Referendum passes, this is how the county’s debt would appear.

While the new school cost is $47 million, we would carry it on our books as principal plus interest, so the new school would add about $62 million to the county’s debt. The straight-line payment for the new middle school would be approximately $3,096,000 per year for 20 years. Thus, total debt payments for our schools would rise to about $6,039,000 each year. Total school debt, including the new middle school, would be just over $88 million. Adding other existing county debt, the grand total for Pulaski County would be about $93 million, with the school debt accounting for 95 percent. The county could lower the new school’s initial payments by using structuring to keep taxes a little lower; however, that would increase the amount of interest paid.

Taxes

Citizens have called me frustrated that we have to raise real estate property taxes to pay for a school. People have asked if we could tax only parents of children in the schools. No. Raise the meals tax? No, we are at the maximum allowed for counties of 4 percent. Tax tobacco? No, State law will not allow counties to do that. Even raising the car tax would have limited results. For each penny we raise the real estate property tax rate, it will bring in about $250,000. In comparison, Montgomery County brings in $750,000 for each penny due to their higher tax base. Our present tax rate is $ .64 per hundred dollars of real estate value. The school bond would add between $ .09 and $ .13 to that tax rate, which would be the largest tax increase in county history and possibly be twice as large as our previous largest tax increase.

One other area we need to think about when we consider raising taxes is the effect it would have on our local employers. Could it effect their employment levels or their plans to expand? We also must keep in mind how higher taxes may lessen Pulaski County’s ability to compete for new businesses. Additionally, with this increased level of debt, the county would be prevented from borrowing more money until we paid something off.  This could delay other school repairs or major economic development activity until after 2023.

If the voters decide to add the new school, then the Board of Supervisors will act quickly to issue the bonds. If the voters turn down the bond referendum, then the Supervisors will work with the School Board to find an affordable alternative to a new school.

I have heard from many folks that feel strongly on both sides: for a new school or against adding so much debt and increased taxes. Now is the time to hear from you by voting on Tuesday, November 7. The polls will be open from 6 a.m. to 7 p.m.

By ANDY MCCREADY, Chairman, Pulaski County Board of Supervisors