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BOE leaning toward $20M loan based entirely on property taxes
by Gregory R. Norfleet · News · October 27, 2016
The school district tax rate to pay off loans can go as high as $2.70 per $1,000 assessed valuation on your home.
Because of the loans the school has out right now, the school district levies just over $1.07 to pay those off.
To go higher than the $2.70, 60 percent of the voters must agree.
That’s question No. 1 West Branch Community School District wants to ask voters.
Question No. 2: How high?
That second question is not quite ready.
When the school board wrapped up a 2 1/2-hour work session Oct. 20, the majority leaned toward borrowing $20 million, based entirely on property taxes, for additions to Hoover Elementary and West Branch High School.
If that passes, the tax rate to pay off those “general obligation” bonds would increase from $2.70 to $3.50.
Yet a minority of school board members disagreed on whether voters would approve a nearly 30-percent increase to that G.O. tax rate.
A second option: Borrowing $17.8 million on property taxes and $2.2 million from future sales taxes. Those sales taxes come from the Physical Plant and Equipment Levy (PPEL) and Secure an Advanced Vision for Education (SAVE, formerly the School Infrastructure Sales and Service tax or Local Option Sales Tax).
Splitting the money that way means the $2.70 tax rate going up to $3.25, in increase of a bit more than 20 percent.
And as far as the date for the vote itself, the school board learned toward February, which gives them time, should it fail, for a second try in April.
The school board has been cutting, reformatting and tweaking the plans to try to bring the cost down to about $20 million. They were less than $100,000 from that goal in September, though a look at new sketches last week suggested the plans need more work.
Board member Mike Owen said a February vote will require a lot of community education in a short time.
“This is a complex project,” he said. “It’s not an easy thing for some people to understand.”
Board President Mike Colbert warned that board members need to prepare for questions about the project, even if not all the details are ready.
“The second this thing is out there, we’ve got to start defending it,” he said.
Board member Jodi Yeggy said the big components of the project have not changed, like a new auditorium and middle school classrooms at the high school. Superintendent Kevin Hatfield added, “and 21st-century upgrades.”
Matt Gillaspie, senior vice president of public finance investment banking firm Piper Jaffray, said the ballot language ought not be too broad nor too specific because anything mentioned on the ballot must be done if it passes. For example, if the ballot says the school will build a 700-seat auditorium, the board cannot change the number of seats to save money.
One of the primary reasons the school board prefers asking for $20 million paid entirely by property taxes is because the sales tax money is more flexible. If the project goes over $20 million for unforeseen reasons, the board can borrow from PPEL/SAVE without again going to the voters.
Also, the sales tax revenues pay for things like buses and technology. Hatfield and Gillaspie said that if the board decides to split the $20 million between property and sales tax revenues, they made sure to leave room to pay for usual expenses. However, Gillaspie warned, there could be six to 12 months where the school board could not use PPEL/SAVE for “extra stuff.”
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