Some school districts will get relief from property tax cap effects on their budgets, but many more could feel the sting of additional losses through a measure making its way through the state legislature.
House Bill 1062, which exempts debt service funds for school corporations from property tax impacts, includes a proposed change that would give relief to districts that lose 10 percent or more of their capital projects funds to the caps. A vote is expected as early as today or by the end of this week from state legislators.
At the New Albany-Floyd County Consolidated School Corp.’s meeting on Tuesday, Fred McWhorter, chief business officer, said since it falls short of that threshold, its impact will double for this year.
“If you remember a few months ago, we actually transferred money from our rainy day fund to help out with the transportation fund,” McWhorter said. “I said ‘hey, this should last a couple years.’ But I qualified myself with, ‘unless this doesn’t get corrected.’”
In 2013, the district’s capital projects fund, transportation and bus replacement funds lost $652,880. But the law takes what’s normally subtracted from its debt service fund and spreads that impact onto the other three funds.
Next year, McWhorter said debt service won’t get touched, but the other three funds will lose more than $1.3 million.
State Rep. Ed Clere, R-New Albany, said the House of Representatives fought to keep any kind of threshold out of the legislation. When it went to the Senate, it added a 20 percent threshold. To a degree, he said the 10 percent compromise wasn’t as bad, but knows it still puts extra stress on school district revenues.
He said he expects the bill to pass with the compromise included.
“I’m going to continue to advocate for there being no threshold,” Clere said. “But with the pushback we’ve encountered from the Senate, I’m just not sure we’re going to get there. As with any issue, legislature can continue to work on it in future sessions and I hate to suggest that might be our only option.”
McWhorter said though the impact was cumbersome before the addition of a 10 percent threshold, he’d prefer the bill revert to its original form.
“If it fails, we’re actually a lot better off if nothing had been brought forward to begin with,” McWhorter said. “We still have a week to go, I’m hopeful maybe they’ll still compromise.”
State Sen. Ron Grooms, R-Jeffersonville, is in favor of eliminating the threshold, and continues to push for getting rid of it.
Grooms says he expects a decision as early as today or Thursday on whether to implement a 10 percent or 20 percent threshold, or none at all.
“My hope is that they take the threshold out of there completely,” Grooms said. “I had that discussion this afternoon with one of the Senators that’s on the conference committee. He didn’t seem to be really excited about it being in there, either. The decision will be made [Wednesday] morning when the House goes into session. Then, it’ll go into a conference committee sometime [Wednesday].”
Though the district has made hard budget decisions in the last four years, Clere said he thought some of its actions have shown it’s not so limited by finances.
The board voted to pass $6 million in bonds for several different projects, including $1.25 million for artificial turf for the football fields at both New Albany High School and Flayed Central High School.
“With making decisions to spend money on artificial turf, I’m not sure how cash-strapped they are,” Clere said. “They have an argument that these monies come from different funds, but at the end of the day, all of the money comes from the taxpayer.”
However, he said while eliminating debt in government is important, it really hasn’t been an issue for school districts.
“There’s no question that we need to ensure that school corporations and other units of local government are in a position to repay their debts, but that was never in question,” Clere said. “I think it was a classic case of a solution looking for a problem and we’ve been trying to correct it ever since.”
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