Presented with a dilemma in which returning about $1.1 million to local property taxpayers would result in the loss of more than $5 million state funding to the schools, the Bulloch County Board of Education on Thursday tentatively adopted only a partial millage rate rollback.
A state law called the Georgia Property Taxpayers Bill of Rights requires local government boards to roll back their tax millage rates to offset any inflation in property values or announce a tax increase and hold three public hearings before final action. The partial rollback doesn’t fulfill that requirement, so the school board now has two tax increase hearings set for 9 a.m. and 6 p.m. Aug. 8 and a third set for noon on Aug. 15.
Superintendent of Schools Charles Wilson’s annual advice to the school board, for about a decade, had been to adopt the full rollback rate whenever possible and avoid any tax increase hearings until a real increase in the millage rate is actually needed.
But it isn’t that simple this year, he told board members at Thursday’s brief, midday meeting called for the sole purpose of tentatively adopting the tax digest and millage rate.
“We’ve always captured that rollback, and we had intended to do that same thing this year,” Wilson said. “However, a little bit of a unique situation here. We have to combine the millage rate that y’all adopt … with the effective millage rate of the Local Option Sales Tax. …”
The sales tax he was talking about is not the Education Special Purpose Location Option Sales Tax, or E-SPLOST, which is used for school construction and other capital spending, but the older, original 1% local sales tax. As established decades ago in county-specific legislation, all proceeds from the original Local Option Sales Tax in Bulloch County go to the operation of the public schools.
Bulloch is one of fewer than 10 Georgia counties that do this; elsewhere, the tax goes to county and city governments. But here, the school property tax millage is offset by the sales tax for school operations, which has to be counted toward a total “effective millage rate” for school funding purposes.
In order to receive an annual school equalization grant from the state, school districts must by law maintain an effective millage rate of at least 14 mills. While the Board of Education’s actual property tax rate last year was 8.568 mills, the sales tax kept the total effective millage over 14 mills.
But then the taxable value of property in Bulloch County, as determined by the county Board of Tax Assessors and staff, increased about 13% overall from January 2021 to January 2022. That included about 4% real growth from construction and development and about 9% inflation across all types of property, while home values increased at a faster rate.
To avoid increase hearings this year from the inflation in values, the Board of Education would need to adopt a rollback rate of 7.829 mills, county Chief Appraiser John Scott recently informed school system officials. But that reportedly would have brought the school board’s total effective rate down to 13.366 mills.
“And if we don’t maintain that minimum of 14 mills, what happens is we end up foregoing our equalization grant, which in our case is over $5 million a year,” Wilson said Thursday. “So, as you can see, it would not behoove this district to let that roll completely back as it normally would based on this year’s tax increase.”
So, working with Assistant Superintendent Troy Brown and Businesses Services Director Alison Boatright, Wilson had determined that a partial rollback rate of 8.263 mills would keep the effective rate at or slightly above 14 mills.
“By doing that, full disclosure, that in essence constitutes a tax increase,” Wilson said.
A 5.54% rise
The partial rollback to 8.263 mills will leave property owners, on average, with a 5.54% increase in the school funding portion of their county taxes. Actual increases vary with individual appraisals based on the prices of property sold in a neighborhood.
On property that had a fair market value of $175,000 last year before an average increase in its appraisal, the lack of a full rollback will result in a school tax increase of approximately $30.38, without considering any exemptions.
The full rollback rate of 7.829 mills would have eliminated the inflationary increase but would still have given the school system about $178,974 in increased revenue from real growth. According to the school system finance team’s calculations, the partial rollback will result in increased revenue of about $1,255,281, or about $1,076,306 more than the full rollback.
That’s almost $1.1 million that school system officials weren’t seeking and hadn’t budgeted. But by keeping it, the school system will also keep the more than $5 million in equalization funding. The state grants are meant to partially equalize the per-student resources of poorer school districts with wealthier ones.
On a motion from board member Glenn Womack seconded by member Glennera Martin, the school board voted 6-0 to tentatively adopt and advertise the 8.263 partial rollback rate. Members Stuart Tedders and April Newkirk did not attend.
After the Aug. 8 and Aug. 15 hearings – which staff members would conduct and board members are not required to attend – the board is slated to act to set the final millage at a meeting Aug. 25.
Showing a surplus
The millage rate dilemma occurs as the school district’s general fund appears flush with cash after more than $36 million was allotted to the Bulloch County Schools under the Coronavirus Aid, Relief, and Economic Security, or CARES, Act of 2020 and the American Rescue Plan Act of 2021. The special federal funding can only be spent for certain purposes, and the school system is banking it to spend in a multi-year plan.
The Bulloch County Schools general fund budget for fiscal year 2023, which began July 1, projected almost $113.7 million in revenue and a little over $107 million in spending. The excess revenue is adding to a fund balance of more than $52 million, with $5.2 million planned to go into a reserve.
After the partial rollback, property taxes are projected to net $20.49 million for the general fund. In the budget, the Local Option Sales Tax was projected to bring in $15.5 million. State funding is expected to provide $71.44 million.