Combination of sales, property could be key

Published 9:27 am Wednesday, February 19, 2003

By By PAUL KEANE – Special to The Standard
(Editor's Note: This is the fifth in a six-part series looking at the funding crisis faced by public schools in Escambia County. This installment looks at a combination of a property tax and a sales tax increase.)
Sales tax or property tax, which way to go in funding education in Escambia County? When push comes to shove, it may take a combination of both, at least in the short term.
Escambia County Schools and Brewton City Schools are both facing funding shortfalls after three years of proration and a downturn in the economy, which in turn has caused sales tax revenue to dwindle. By sometime next year, the county school system will realize a total of $4 million less in state funding over the past four school years. Reserves have been depleted nearly as much as they can and administrators are making cuts through attrition and other means in order to stay within the budget.
Escambia County Superinten-dent Melvin "Buck" Powell has pushed for an increase in the ad valorem tax, shying away from a sales tax increase.
And while an ad valorem tax would provide more stable funding -- and not be tied to the spending habits of local consumers -- many city and county leaders, along with business owners, tend to lean away from a sales tax.
Business owners, especially in Atmore, also fear a backlash from consumers should the sales tax be increased. Merchants argue that an increase would push consumers toward Pensacola, Mobile and Bay Minette, both locations within easy access of Atmore. Many consumers argue they can save the tax money while shopping in those areas.
The board of education on Thursday developed a plan to ask the county commission to pass a measure calling for a referendum on a 10 mill increase in ad valorem taxes. That would equate to about $100 a year for a homeowner living in a home appraised at $100,000.
The challenge of a property tax increase may be in its timing, though. Should the measure pass, it would still be January of 2005 before the BOE would realize any revenue from the increase. That means an entire school year plus another semester would pass before additional funding would be seen.
Powell says one option is to borrow against the system's assets, but the State Board of Education does not look favorably upon that action. Once a system has borrowed its limit against its assets, the state can come in and take over the system, making necessary cuts to meet the obligations.
And borrowing would then require a new debt service for the system, and that would have to be covered by some type of revenue. The most logical would be to utilize some of the additional property tax revenue should that measure be approved.
Powell said he and his staff will continue to make cuts and look at other money-saving measures to keep from borrowing money over the next three semesters in the hopes that an ad valorem measure would be passed. For that measure to pass, though, will take a big grassroots efforts on the part of supporters of the increase.
Powell also said some type of temporary funding may have to instituted in order to carry the system through until a potential property tax increase could be realized.
Montgomery County School District passed a similar measure a little more than a year ago, allowing that system to make it through parts of proration without having to dwindle its reserves. Now, though, the system is facing another shortfall in state funding and the temporary sales tax has expired, meaning that system is facing the same problems as Escambia County.
The Mountain Brook City School System recently said the city council passed a measure calling for a vote to increase ad valorem taxes. The measure called for an increase of either 8, 10, 12 or 14 mills, without specifically saying which amount would be utilized. Officials with the system have sent out information explaining what the increase would mean -- both in property taxes per year and in additional revenue for the system -- and the general consensus is that the measure will pass.
Escambia County Commission Chairman Larry White has said throughout a series of town hall meetings that the commission would consider any proposal presented by the BOE, but that any such measure would have to be voted on by the people of the county.
(Next: What can the public do above and beyond tax increases to help public schools?)

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