Education

April 15, 2014

Dalton school board nears tax increase

The average homeowner would see about a $65 yearly property tax hike if the Dalton Board of Education votes to increase the school system’s millage rate at the rate they are considering.

The board is close to setting its property tax rate for fiscal year 2015, which begins July 1. After toggling the number between a rate of 8.55 and 8.85 mills at a work session last Monday, the board is now considering a rate of 8.5.

The tax rate is currently 7.845 mills, with a mill representing $1 of tax for every $1,000 of assessed value. For a $100,000 home — without exemptions — a 7.845 rate means a homeowner pays $784.50 to the school system each year, typically by paying into escrow accounts each month ($65.38 a month). With the same value house, the new rate would mean homeowners owe $850 (or about $70.83 a month) to the school system each year.

That was the number Theresa Perry, school system Chief Financial Officer, used in her most recent budget draft presented to the school board at their Monday night meeting.

Board members have unanimously said a tax hike is necessary to keep the school system financially afloat and that an increase of to 8.5 mills isn’t as “painful” as tax rate increases in other school systems during the recession. Millions of dollars in cuts — the only other real option, they all said — would be detrimental to the “quality education” they say is offered at Dalton schools.

 Chairman Danny Crutchfield said any potential tax rate increase will not be done without careful consideration.

“No one likes taxes, we get that,” he said.

The board is expected to adopt the tentative tax rate at their May 12 meeting, with final approval set for June 9. If board members vote to set a higher tax rate state law requires them to hold three public meetings for community feedback in the fall where they can change the tax rate if they vote on it before October.

The most recent budget forecast provided by the school system assumes $65.4 million in revenue and $66.1 million in expenses for fiscal year 2015, leaving roughly a $700,000 deficit.

In the fiscal year 2014 budget, officials expected $59.6 million in revenue and $64.1 million in expenses, with a $4.5 million shortfall. Board members voted to pull from their reserve fund to make up the difference, reducing the fund from $12.5 million to $8 million. The fund balance would likely be used again to absorb the $700,000 shortfall, school officials said.

Board members have long said they are reluctant to pull millions of dollars from the fund balance again because it provides a safety net during tight financial months when property tax revenue gets stale and the school system still has to cover payroll.

The anticipated 2015 numbers also include an assumed increase in state funding of about $3.5 million, cuts to school operations of $800,000 from unfilled positions and lower materials costs.

Perry also took a look at budget forecasts for fiscal year 2016 and 2017 to demonstrate that an 8.5 millage rate could carry the school system through those years.

Those budgets are hard to predict accurately, Perry said. Her projection included several “conservative” assumptions such as no increase in the value of all property — homes, cars, offices, among other items taxed within the county. If the value of those items increase, it means the school system could see some financial relief.

Other assumptions Perry included in her 2016 and 2017 forecasts included growth in the student body that would mean more state funding. The school system has seen a spike in its student body. Overall enrollment has gone from 5,659 in 2003 to roughly 7,700 today. If that continues, Perry said, it could mean $1.2 million more in state funding each year.

Superintendent Jim Hawkins said it’s possible to see property values go up in the next few years.

“When the economy gets better its first seen in sales tax, then income tax next ... but (the value of property) is the one that lags,” he said. “We don’t want to have to change the tax rate every year and we think this one will do it for awhile. If these assumptions don’t materialize, obviously then the deal’s off.”

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