February 20, 2020
By: Dwayne Page
It may be back to the drawing board for the Board of Education.
Fearing that the board’s latest proposal for a multi pre-K to 8 school construction project was something the county could not afford long term and still be able to fund other future needs, the budget committee Wednesday night voted 5 to 0 to recommend that the full county commission deny the request for a minimum of $48,685,000. If the county commission agrees with the budget committee the Board of Education will have to revise its request to fund a less expensive school construction project.
Members of the budget committee are Dennis Slager, Sabrina Farler, Anita Puckett, Jeff Barnes, and Jerry Adcock, all members of the county commission.
In rejecting the request, the committee was not making a judgment on the plan itself, just on the county’s ability to pay for it.
Steve Bates, the county’s financial advisor, said while the county could issue bonds of $55 million to cover the school board’s request the annual debt payment to the county would be $3 million a year for up to 25 years and new revenue would be needed to fund it. Such a long term obligation would also hamper the county’s efforts to fund other needed projects in the coming years, such as perhaps another new school or jail.
“If you do $55 million at $3 million a year you’re looking at a minimum of a 60 cent property tax increase,” said County Mayor Tim Stribling.
When asked about a possible wheel tax to help fund it, Stribling said a $50 wheel tax would only generate about one million dollars a year and the property tax rate would still need to be raised by probably 40 cents.
The county commission can take action on its own to implement a wheel tax but passage requires at least a two thirds vote (10 out of 14) in support on two separate readings at least a month apart. Residents opposed to a wheel tax could mount a petition drive between the first and second readings to force a public referendum on the question.
Even if the county were to act now on tax increases, Bates said sufficient funding would not be in place for a school project until at least next spring.
“We can’t issue bonds right now, meet cash flow requirements, and take on that kind of debt right now. You don’t have the revenue in place and even if you adopted a revenue source now it probably won’t hit until next March anyway when taxes come in. Even with a wheel tax, February, March, and April are the biggest months for license registration and renewals so you are months behind even if we start now,” Bates continued.
“What is the long range vision is what I would ask the committee on what you want to do and how you want to get there in order to maintain a low tax rate and cash balances. I don’t care what you build. My job is to help you do it at the lowest cost and tax rate but $55 million will strap the county down for a long time because you have to worry about what comes after in 10 years if you need a jail. What happens if you need another school? That is where the long range planning will have to come in. You have to address how much revenue are you willing to raise and are you going to be okay with that for the next 25 years because if anything comes after that then its only to the extent you have paid off some debt that you have any debt capacity left,” said Bates
Should the county choose to fund a less expensive school construction plan, Bates said the payment schedule would be the same but for a shorter and more manageable term.
“I think the revenue stream that is required to keep you where you need to be financially will stay the same. If you do a $30 million bond issue the payment will still be $3 million to help you get to where you need to be but you can do it for 10 years rather than 25 years and pave the way for something else in 9 to 11 years and whether we take some out of the local purpose fund plus a wheel tax and property tax all that can be hashed out later. In 10 years you can knock it out pretty quickly and do something else but if you stretch it out to 25 years it ties you down a long time,” added Bates.
“In DeKalb County you have a debt management policy that says you will keep debt at 9% of assessed value which means about $42 million and debt per capita at $2,200. If you issue $55 million debt per capita it is probably going to be over $3,000 and 12% of assessed value which means you will have to amend your debt management policy,” said Bates.
“This county has been good over the years in managing . There have been people prior to this commission and budget committee who have managed debt well in the county and I think it is our duty to do that going forward,” said County Mayor Stribling.