No Tax Increase Needed For BOE Building Plan
|That is if commission adopts the proposal presented
by Commissioner Austin Shaver at Monday's commission meeting. Shaver's
plan would allow for up to 37 million dollars for the building plan
depending on the final fixed interest rate on the loan. Shaver's
proposal would shift current property tax pennies from the county
general fund and the school's general fund to the school debt service
Commissioner Don Miller, who last month had proposed a twenty-four cent property tax increase to pay for the building plan responded to Shaver's plan by saying he "wished we could do it with out a tax increase" but didn't think it could be done. Austin assured the commission that it could in fact could be done.
Commissioners decided to have the matter placed on the
next workshop to allow Shaver to provide further details of his plan.
Commissioner Shaver and other commissioners all agree that the time has
come to take the next step and give the board of education direction on
their adopted building plan.
Plan would fund Loudon building program
LOUDON - Loudon County Commissioner Austin Shaver on Monday night presented a plan to the commission that would fund a school building program of up to $37 million without the need for a property tax increase.
The plan was met with a mixture of skepticism and enthusiasm from other members on the commission.
"I'd be delighted if we could pull this off," said Commissioner Don Miller.
The plan would involve using three separate funds to support a 30-year loan. Ten cents of property tax revenue would have to be diverted to pay for the loan. Each penny would equal about $114,000 in property tax revenue, Shaver said.
The loan would be paid out of the school department's Fund 156 by shifting tax money from both the County General Fund and the School General Fund.
The commission last night voted unanimously to spend $650,000 to pay off an $800,000 loan currently in Fund 156. Paying off an additional $3 million loan early will cost $1.86 million but will save more than $49,000 in interest, leaving approximately $3.5 million in fund reserves, Shaver said.
While continuing to pay down another $12.3 million loan at the cost of $1 million per year, the general fund, which will take in $2.5 million, will leave about $700,000 per year to pay toward the school loan.
The County General Fund, which grew $2.5 million last year, can afford the loss of 5 cents of the tax rate towards the plan, Shaver said.
The combination of tax money from the county and school general funds will generate $2.85 million per year. Subtracting the $1 million to pay down the $12.5 million debt will leave $1.85 million per year to pay toward a 30-year, $37 million loan at a 3 percent adjustable rate, Shaver said.
Commissioner Miller said he was cautious about using past growth rates of the two funds to predict their future balances. The funds have to maintain a certain reserve, and the future of income growth in the current economy is not certain. Predicting how the adjustable-rate loan might increase also is difficult, he said.
Miller said he would much rather wait until the yearly budget is set in June before committing to the terms of the loan. A 20-cent property tax increase would guarantee funding of up to $40 million on terms that could more easily be predicted, he said.