Straight Talk on School Funding and Taxes

GPS2016

(Click to enlarge.)

There’s been a lot of talk—and a lot of confusion—about school funding. We’re all for reality-based debate, so here is some info in the service of that.

First off, the $17.2 million requested for the BHS/BMS expansion is an appropriation from current county funds. Likewise, initial funding for phase 1 of the $43 million three-phase Page Middle and High expansion comes from existing county funds. Typically, the County funds capital projects like these by going to the bond market, not by generating new revenue. These resolutions will be voted upon at tonight’s County Commission meeting.

Second, the County Commission Budget Committee just approved a $5 million cut to the 2017-18 WCS operating budget. The final vote on the operating budget will be on July 10.

 

Long Term Revenue Sources

WCS expects 20,000 new students over the next decade. This boom will require capital investment (building new schools) and increased operating budget (to fund teachers, building operations, etc.). According to the WCS 5-Year Capital Outlay Plan, the district will need $429 million in new school buildings, renovations and expansions over the next five years. No one thinks we have a revenue system equipped to address this growth.

 

How should we fund schools?

There are a few ways to increase funding for schools. All involve fees or taxes. It would be awesome if there were another magical way to produce revenue. If there is, we have no idea what that is. (See “How about more money from the state?” below)

The Education Impact Fee 

  • This is a fee on new construction. It is expected to raise a little less than $15 million annually when fully implemented next year.
  • This revenue will be allocated to the county’s debt service for WCS capital projects.
  • This fee was voted on by the County Commission. It can be changed by the County Commission.
  • This fee does not address turnover of existing homes in established communities like Brentwood. 7,641 homes are projected to be built in the Page zone while only 108 are projected in Brentwood.

Sales Tax

  • The state sales tax is 7%. The county sales tax rate is currently 2.25% (for a total Williamson County rate of 9.25%).
  • If the local rate were increased to 2.75% (maximum allowed), WCS could gain $11 million more in funding annually. Increasing the tax to 2.5% would yield approximately $8 million per year.
  • Increasing the county sales tax rate requires a two-thirds vote from the County Commission AND citizen approval from a county-wide voting referendum.
  • District 6 Commissioner Paul Webb plans to introduce a resolution for a referendum to be held asking voters to support a half-cent sales tax from 9.25% to the maximum 9.75%.
  • A local sales tax increase was considered in 2011 but withdrawn. We don’t know that a sales tax referendum has ever been successfully passed in Williamson County. It requires voters to show up for a special election at an odd time of year, which drives down turnout, and it requires people to show up to specifically vote to raise their taxes. It also provides a more attractive focal point for anti-tax folks to organize around. Some may propose this option because they want it to pass and others because they think it will fail. Be thoughtful about motivations on this potential funding mechanism. Most experienced Williamson County political observers think it is unlikely to pass because turnout for a special election tends to be more anti-tax than the electorate as a whole.

Wheel Tax

  • The current wheel tax is $25.75. Increasing the wheel tax to $100 would mean approximately $18 million in revenue. In fiscal year 2015-16, the county sold approximately 180,000 stickers.
  • Like sales tax, an increase in the wheel tax would require a two-thirds vote from the County Commission and then citizen approval from a county-wide voting referendum.
  • Again, many longtime political observers believe a wheel tax has little likelihood of passage for the same reason as a sales tax. An increase in the wheel tax failed in 2004, 49,971 (72%)-19,704 (28%).

Property Tax

  • The current property tax rate is $2.15 (per $100 of a property’s assessed value). This rate represents the lowest tax rate in middle Tennessee and the lowest among Tennessee counties with populations greater than 100,000.

TaxRateMap

Property Appraisal = $400,000

Assessed Value (25%) = $100,000

Property Tax Rate = $2.15 per $100 of a property’s assessed value

Property Tax = $100,000/100 x $2.15 = $2,150

  • Each additional cent equates to roughly a million dollars so in order to increase revenue by $8 million, we’d need a rate of $2.23. On the sample $400K home, the annual tax bill increase would be $80.
  • Increasing the property tax would require a simple majority – 13 out of 24 County Commissioners.
  • County Commissioners, particularly the thirteen who voted for the property tax change last year, may be reluctant to vote for an increase especially with every seat up for election in May 2018 if they believe their constituents are against it.

District 2 Betsy Hester and Judy Herbert, District 3 Matt Milligan and David Pair, District 5 Tommy Little, District 6 Paul Webb, District 7 Bert Chalfant, District 8 Jack Walton, District 10 Matt Williams and David Landrum, and District 12 Dana Ausbrooks and Steve Smith voted yes. Another yes vote was Tom Bain (D7) who retired this year. Dwight Jones (D1), Lew Green (D5), and Brian Beathard (D11) were absent.

Most of the same commissioners who voted against the county budget also rejected the property tax change – District 4 Kathy Danner (voted for overall budget) and Gregg Lawrence, District 6 Jeff Ford, District 8 Barb Sturgeon, District 9 Todd Kaestner and Sherri Clark, District 11 Brandon Ryan, and District 1 Ricky Jones (abstained from voting on overall budget).

 

How about more money from the state?

Getting more money from the state would be excellent. Currently, the state only funds a portion its school funding formula, known as the BEP (Basic Education Program). A word of caution: state funding would still not solve our local school funding issues. If a local elected official tells you the money should come from the state, ask them to fill you in on their conversations with the legislative delegation. If they’re actually advocating for the state to fully fund the BEP, for example, that’s great. Otherwise, they’re just talking. The chance of getting more than our calculated share from the state is slim because Williamson County has the ability to generate more revenue than most counties in the state.

 

See more articles on School Funding here.

 

 

  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •