In the face of mounting concern and confusion, Forsyth County’s school board may discuss the school system’s millage rate at a meeting next week.
Board Chairman Tom Cleveland on Wednesday acknowledged the need to do so, citing what he described as “the discussion going on in the community.”
The issue centers on the district’s ability to make payments on bonds issued in the 1990s, a situation aggravated by the sluggish economy and falling tax digest.
“Bottom line is we’re running a $6 million plus deficit on the bond payments and that’s what we’re in the process of helping to deal with in terms of when we have to do anything,” Cleveland said. “We basically only have so many ways for income to come in.”
If the board were to decide against raising the millage rate, which is used to determine property taxes, the deficit could be covered by the school system’s reserves fund, he said. That fund totals about $40 million.
The need for and timing of a possible tax increase appear to have caught some residents by surprise, particularly coming after voters in March approved a five-year extension of the 1-cent sales tax for education.
The bulk of the tax program, which will not take effect until July 2012, will go toward retiring the system’s 2005 and 2007 bond debts.
Officials and a group that backed the extension, Citizens 4 Kids, had said the district would have been forced to raise property taxes if the referendum failed.
It didn’t, passing with more than 80 percent of the vote. But much to the dismay of some in the community, a tax increase for the coming year has not been ruled out.
Cleveland said the millage rate hasn’t come up yet.
“We haven’t talked about (the millage rate) as a board,” he said. “We will consider whether we leave it the same, reduce it or raise it, and that’s the discussion that normally happens within the June time frame.”
After this month, only a July 21 meeting remains before Aug. 1, when the school board must submit its millage rate to the county.
At least one group has launched a Web site and circulated information encouraging residents to halt any possible tax increase.
The anonymous online effort, for which no one has taken credit, aims to hold the school board accountable for language used in the recent sales tax campaign.
What the campaign materials did not mention is that there were still voter-approved bond programs from 1992, ’95 and ’98, on which the school system owes more than $86 million.
Payments on those bonds were not included in the recent sales tax extension.
The online group contends the school board, if it were to raise the millage rate in order to pay those bond debts, would break a promise made to voters, many of whom may have believed the sales tax would cover all of the system’s bond debts.
The different bond programs have stirred confusion.
According to school system documents, the older debts are being paid off with property taxes from the school system’s bond millage rate of 1.418 mills, which can go only toward bond debt.
That rate is separate from the system’s maintenance and operations millage rate of 15.395 mills, which can be used only for the budget.
A mill is equal to $1 for each $1,000 in assessed property value. Assessed value is 40 percent of actual market value.
Each mill brings in an estimated $8 million in revenue, according to information on the school system’s website.
However, because of the struggling economy, tax assessments show the majority of the county’s property values have fallen this year.
That will mean lower taxes for homeowners, but less revenue for the school system and government.
The decrease is still being tallied, but preliminary estimates show Forsyth County property tax revenue may fall by about 5 percent.
“We don’t plan property values. That’s one thing we don’t do,” Cleveland said. “The home values, which taxes are assessed up on, have now decreased.
“We don’t know what the millage we set will bring in in terms of revenue, so we’re still pending the final digest in order to have some really good numbers to hang our hat on.”
The board is set to approve its $263.3 million budgeton Thursday.
Because of less funding from the state and a nearly $6.5 million projected drop in tax revenue, the proposed budget was balanced by pulling money from a federal grant and about $2.2 million from reserves.
But with bond payments, the school system currently has no grant money option.
The only way to pay those down will be through property taxes and sales tax revenue, both of which have been consistently lower than anticipated, school system officials have said.
Cleveland said there is confusion in the community.
“They don’t understand how much we owe and how much we have to pay for what we owe … on an annual basis, so I’m hoping to paint that picture in such a way that all homeowners understand what we’re in debt for,” he said.
“What I hope to do is put the facts out there for everybody to have in their hands as they come to make statements to the board.”
In the meantime, all organizations contacted have denied responsibility for the push against a tax hike.
The tax was widely supported by various groups and leaders in the community, including the Cumming-Forsyth County Chamber of Commerce.
Chamber Chairman John Kieffer said there “has been some question that some of the (campaign) information did state that if the (sales tax extension) were passed, the millage rate would not increase.
“However, it is my belief and understanding that the decision to raise the millage rate has not been made yet and there are still more meetings and more issues to discuss,” Kieffer said.
“I think the chamber would have supported the (sales tax) even in the event of a millage rate increase so long as we are convinced the school board is doing everything within their power to keep the millage rate as low as they can.”
Citing its platform, Forsyth County Tea Party would be against a tax increase, officials said.
“In this economic environment, we need to be containing costs and containing overhead and finding cost savings, not doing the typical government move, which is just to increase taxes,” said Steve Voshall, party chairman.
Voshall added that Cleveland is scheduled to speak at the party’s meeting later this month, where the topic likely will be discussed.