D-26 studies tax increase
By BRETT ROWLAND - browland@nwherald.com
CARY – District 26 voters could be asked to approve a tax hike next February.
As the Cary school board looks to get back in the black after years of deficit spending, administrators presented two options for tax increases that could go before voters on the 2010 ballot. The alternatives were detailed at a special Finance Committee meeting Monday.
An administrative team led by Superintendent Brian Coleman recommended a plan that would ask voters to approve a $0.70 education rate increase tempered by a $0.20 bond rate decrease.
If approved by voters, the tax rate would increase from $2.6871 per $100 of equalized assessed value to $3.1871. That would mean the owner of a $300,000 home who takes the homestead exemption would pay about $3,012 – or $473 more than the total tax bill of $2,539 to the district.
The plan includes refinancing roughly $25 million in outstanding bonds and extending the term of the debt 10 years – a move that will cost taxpayers another $18 million over the life of the issuance.
“We’re at a point where we have to do something drastic to get ourselves out of this situation,” said T. Ferrier, the district’s director of finance and operations.
At the end of the year, the district is facing a deficit of at least $1.88 million. However, revised projections based on previous tax collection rates could put that figure at $2.66 million, Ferrier said.
Ferrier also showed the Finance Committee a plan for a $20 million working cash bond referendum. The working cash bond would be put to voters in the form of a $0.10 or $0.15 rate increase. That plan would add an estimated $95 or $142 to the annual property tax bill of the owner of a $300,000 home who takes the homestead exemption. However, administrators said a working cash bond would not be sustainable in the long run.
The recommendation comes after voters roundly rejected a $17 million working cash bond referendum with a more modest affect on property taxes this year. Given the economy and recent referendum failure, several Finance Committee members expressed doubts about the success of another tax increase.
The administration’s recommended plan includes a $0.20 bond rate decrease for an overall net rate increase to taxpayer’s of $0.50 to make it “more palatable,” Ferrier said.
“Assuming we don’t want to cut art, music, P.E. and everything and make this district a bare bones district, we need $0.70,” she said. “It’s very important to me that if we do this, we get what we need to make this district a functioning district and make it a good district that people want to continue to send their kids to.”
Though refinancing and extending the district’s outstanding debt would ease the initial impact for taxpayers, Board member Steve Bush said he was worried about the price tag.
Bush also raised concerns about the future projections for replenishing the district’s coffers based on the education rate plan. Those projections assumed teacher salary raises would be tied to the consumer price index.
“This is predicated on a number of assumptions that heretofore have not been discussed,” Bush said.
After an hour-long discussion on the referendum recommendation, the Finance Committee decided to postpone taking any action until administrators could provide more information about potential budget cuts and costs.
The Committee could take up the issue again next Monday, Chairman Chris Jenner said. To get on the ballot, the referendum recommendation would need to be approved by board later this month.
The last time that district voters approved an education rate increase was in 1985, a fact longtime Deerpath teacher Deb Radke pointed out during public comments after the committee’s discussion.
“I think trying to explain how we got here is very important,” she said. “We’re asking for an increase to a rate that hasn’t had an increase in a really long time. We need to make sure the public understands what we are asking for and why.”
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