Filed: Thursday, July 9, 2009
RE: Douglas County School Board (BOE) Millage Rate Increase
Summary: Board voted unanimously to raise Bond Millage rate to compensate for declining property tax revenues, but to leave Maintenance & Operations Millage rate at its current level. Net increase in annual tax payment is $69 / $100,000 home value.
Opinion: Good discussion at board meeting. Genuine concern over increasing taxes while everyone is trying to make ends meet in a difficult economy. Explored options other than raising M&O millage; only raised Bond millage because it is legally required, per advise of school attorney and CFO.
Details:
Our schools are funded 5 ways
• County Property Taxes (millage rate)
• County SPLOST
• State Funding
• Federal Funding
• Various Grants (specific projects)
County Property Taxes: 2 different millage rates
• Bond- pays the interest on bonds previously issued
• M&O- day to day maintenance and operation
Bond Millage
Per the CFO and school attorney, Bond millage rates are required by law to be adjusted to guarantee enough money is collected to cover bond interest payments. Given the 2-4% projected decrease in property tax collections from foreclosures/defaults, it legally has to be raised to compensate...so they say. The board voted unanimously to fulfill this obligation at the advice of their attorney and CFO. This will increase property taxes approx. $69/$100,000 of home value. Your house is worth $200K you'll pay an extra $138. Doesn’t seem to be anything we can do about this except know that in the future, when you approve a school bond issue, your taxes will increase to pay the interest.
Maintenance & Operations Millage
The M&O millage was unanimously left at its current rate and not increased, even though property tax collections are down. This would have increased taxes $4/$100,000 of home value. So you say,$4- big whoop-dee-doo. This is a vote on the principal of the thing. Mr. Barnes, Mr. Miller and Mr. Morris agreed that people are suffering and even though $4 doesn't sound like much, if the school system can absorb the hit it seems wrong to preemptively raise taxes. They have other options such as tapping the $38 million surplus. When asked about other ways to save money, the CFO said they had identified some that don't involve teachers/programs, but didn't elaborate. Thank you Miller/Barnes/Morris for balancing the board’s financial obligations while going to bat for tax payers, even if it is only $4.
Mr. Bartlett and Mr. Haskell made the same tired arguments- "If we don't raise the millage rate we could have to cut teachers/programs." This would normally have gotten you another $4/$100K tax increase. Not this time. They got on board with the program, even if it was because they didn’t want to be seen as the only 2 voting to raise your taxes.
The projection is the schools will be $1 million to $2 million short in the general fund. They have 3 options. 1- Find that savings elsewhere (not teachers/program cuts). 2- Tap into the $38 Million surplus. 3- Increase taxes next year if the economy takes a major dive and they come up really short. None of these 3 options require cutting teachers (which they have already done- 89) or programs (which they have already done- art/Spanish).
I'd point out that they could have saved 30% of that $1 million by not paying their attorney 3x what every other in metro-Atlanta makes. If they were willing to share what percentage that same attorney made on the bond issue 2 years ago, we might find the balance of the $1,000,000.
Moving forward we're watching. They know it. They are already acting more responsibly, even if just $4 more so.
Here are some questions I have following the meeting:
- How long is the pay off period for the bond?
- Will it be paid for at that time or will we have to refinance it again?
- How much would we save if we paid it off ahead of time?
- What bank issued the bond?
- How much money did the school attorney make from the bond issue?
- If the bond is paying for 4 new schools, where is the money going to come from to pay for staff, maintenance, utilities, etc.? Is that calculated into projections for next year?
- With this series of new schools, are we caught up? What is the projected need in 3, 5, 10 years, taking into account the recent decline in the growth rate?
If you know anything about Bond millage rates, we'd love to hear from you.
What questions do you have? Go to the What Can I Do tab and send us your questions.