Loudon schools director requests small tax hike to fund budget deficit
LOUDON — As the Loudon County commission moves into the final stages of the 2015-2016 budget process, the big question is whether commission will pass a tax increase to fund the shortages in the school budget.
Schools Director Jason Vance went before commission Monday to make the case for a six-cent property tax increase to fund a $1.6 million deficit in the proposed $37.7 million BOE budget.
Vance pointed to increased operations costs as among the causes of the shortfall. His request also includes 2 percent for teacher raises. A previous request that resulted in a $2.1 million shortfall included a 4 percent raise for teachers and several new science and math instructors.
The additional tax pennies, worth about $164,000, would allow the schools to operate without seriously depleting reserves, he said. The commission budget committee approved the BOE budget on the condition that the schools fund the shortfall out of reserves.
“With the six-penny tax increase we would still probably have to pull about $1 million out of reserves,” said BOE member Gary Ubben.
One of the big questions posed by the commission is just how much money the school department has in its reserve fund.
According to Commissioner Van Shaver, a member of the budget committee, the state requires the BOE keep its fund balance at a minimum 3 percent of the total county budget or about $1.8 million. The school board currently has $6 million to $7 million dollars in reserve, he said.
“So what they are asking is for the commission to raise property taxes so they don’t have to spend any of their reserves or, heaven forbid, make any cuts,” Shaver said.
The BOE believes the reserve fund balance is closer to $5 million, Ubben said. A $1 million withdrawal might be acceptable in a single year but the budget commitment, which includes teacher raises, is ongoing.
“It’s not sustainable for the coming years,” he said.
One of the reasons the BOE needs ample reserves is the possibility of unexpected expenses, he said. The school budget was hit hard this year by an unforeseen contract dispute with a technical services provider that could cost up to $500,000 if a lawsuit involving 45 other school districts cannot be favorably resolved.
County Mayor Buddy Bradshaw said despite increasing costs for items such as insurance, the total $67.7 million budget looks good. He said there were no major cuts and all county employees will receive 2 percent raises.
Other issues on the table include a lawsuit by Session Court Clerk Lisa Niles requesting raises and up to six new employees in her department and a request by Sessions Judge Rex Dale for an additional judge and magistrates in his court.
There is no money in the 2015-16 budget for Niles’ requests, which might require a tax increase in the 2016-17 budget, he said. The new judge and magistrates could be funded through an increase in the litigation tax, he said.
A final commission vote on the budget is expected to take place June 29.
Foot Note: Had to share this one. At Monday's commission workshop, director of schools , Jason Vance was on hand to present the school boards request to raise property taxes. I just happened to step out in the hall at the very moment Mr. Vance arrived at the meeting.
That's Jason on the right. My first thought on the other two was Crocket and Tubbs from Miami Vice? Turned out it was just Dr. Professor Ubben and Dr. Music Best coming along to lend support for the tax increase.
It was fun times for all.
