February 11, 2012

Dalton schools budget draws almost $2 million from reserves

Dalton Public Schools Superintendent Jim Hawkins said he’s no longer expecting a big economic bounce back to solve the school system’s budget concerns.

Instead, Hawkins said he’s accepted that years of cuts to the state funding formula, a declining — or at least not quickly increasing — local property tax base and other economic issues have become “the new normal.” Rather than cutting the budget to “dial back” some of the services offered just long enough to weather the economic storm, he said he’s expecting several more years of lean financial planning.

“It’s not education forecasters that are doing this,” he said. “This is from multiple sources. We’re in a really good financial position right now, and my message is don’t get carried away. We will regret it if we go too fast.”

Board of Education members looked at a first draft of the budget for the fiscal year that begins July 1 during a six-hour board meeting retreat at Dalton State College on Friday. The draft budget projects $55.59 million in revenue and $57.4 million in expenditures with the difference coming from reserve funds.

Drawing the nearly $2 million from reserves would leave a projected fund balance of $10.4 million. About $30.1 million is projected to come from state funding and the rest would come from local sources.

This year’s budget, which ends June 30, is for a projected $54.15 million in revenue and $54.7 million in expenditures.

Finance director Theresa Perry said officials plan to restore two days of teacher pay, bringing the total contract to 184 days rather than the traditional 190, and adding an extra $400,000 to the budget. Officials are also planning for state-mandated salary increases and higher health insurance costs.

Perry said she’s projecting a tax digest decline of 3 percent to about $29 million based on an average of the past several years. Dalton’s government budget assumes a 5 percent decline, she said, but there is some wiggle room if the digest comes in lower than projected.

The draft budget also anticipates the exemption for the freeport tax on inventory will jump from 20 percent to 40 percent, meaning the school district would lose $800,000 in revenue.

Mayor David Pennington, who sat through most of the meeting, said city officials have agreed not to raise the exemption rate unless the school board tells them they’re ready for it. Whitfield County Schools officials expect to lose $2.2 million in revenue during their next fiscal year after the Whitfield County Board of Commissioners voted to raise the freeport exemption from 20 percent to 100 percent.

School board member Mark Orr said the city loses revenue each year because of the declining number of businesses who choose to keep their inventory there. Many are moving to locations that exempt inventory from taxation or at least provide greater exemptions, he said.

Greater Dalton Chamber of Commerce President Brian Anderson said most business inquiries are for buildings with more land than is available inside the city limits.

“The empty commercial development is not as attractive right now as green field development,” he said. “... If I was in your shoes, I would be very conservative because you’re not going to have revenue appreciation like the county will potentially (have).”

The board is scheduled to approve teacher contracts in April, set a tentative budget and property tax rate in May, approve the final budget in June and approve the final property tax rate in September or as soon as the tax digest is available. The tax rate has stayed at $7.85 per $1,000 of assessed value for several years. City taxpayers pay on 100 percent of their assessed value, while county taxpayers pay on 40 percent.

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