Those hoping for lower property taxes this year might be disappointed.
During a special called meeting Thursday, the Forsyth County Board of Education voted to advertise a potential tax increase of 2.185 mills, though the final tax levy may reflect less of a hike.
A final decision on the tax rate will be made during the board’s July 21 meeting, but the temporary approval is required to give the system time to advertise the proposed maintenance and operations millage rate at the increased “rollback rate” of 16.58 mills, as required by law.
The M/O tax rate is currently 15.395 mills, where it has been for the past three years.
The rollback rate is the tax levy that takes into consideration changes in the values of property in the county. The rollback increase is supposed to offset losses in property values so that total tax collections remain constant.
Theoretically, even though the millage rate increases, the total tax dollars collected do not. Depending on the change in their property values, some taxpayers could see a higher tax bill because of the increased levy, and some could see lower tax bills.
The board also approved a 1 mill increase to its debt services, or bond, millage rate, above the current rate of 1.418 mills.
A mill, the rate used to calculate taxes, is equal to $1 for each $1,000 in assessed property value. Assessed value is 40 percent of actual market value.
During the meeting, Dan Jones, system finance director, told the board that once it starts advertising a rate change, there’s still time to lower the millage but not the other way around.
“If you’re not sure tonight, you need to set it at the highest rate you think you will go to,” Jones said. “We have to run the ad. If you set it at a lower rate and then you go back and say we need some more, we’ve got to start this process all over again.”
The board must submit its final millage rates to the county by Aug. 1.
Because bonds are voter approved, increases to the bond millage rate do not need to be advertised, Jones said.
Raising the bond millage rate to 2.418 mills will generate nearly $7.8 million, enough to pay off another year of voter-approved bond programs from 1992, ‘95 and ‘98, he said. It will also leave about $1 million toward reserves, which Jones said was used up to pay previous years’ bonds.
“We need to do something to replace those reserves or we’re going to have to pull money out of, probably, the general fund,” he said.
Jones said reverting to the rollback rate of 1.527 for bonds instead of increasing the rate by 1 mill, wouldn’t be enough.
“Going up to 1.5 only generates about $600,000 or $700,000 additional dollars,” Jones said.
According to the Forsyth County Tax Assessor’s Office, 66,000 of the county’s some 77,500 properties declined in value over the past year. That also means Forsyth County Schools is facing less money coming in if the millage rate isn’t increased.
To supplement the system’s projected $5 million budget shortfall, the board took advantage of approving the M/O rollback rate, which allows the system to collect the same total amount of money as last year, despite the decrease in property values.
Switching to the rollback rate will yield an additional $9.4 million, which Board Chairman Tom Cleveland said “gives us the cushion for those pluses and minuses.”
The budget is facing a $5 million deficit instead of an $11.3 million deficit, Cleveland said, because of a $6.5 million federal grant that will not be available next year.
Board member Ann Crow agreed, saying the system will be facing the same shortage next year and balancing a budget will be even more difficult without the federal help.
“With all the students coming in and everything, I just don’t see us doing it so close that we just cover the shortfall this year,” she said. “I think there are too many variables out there.”
Board member Kristin Morrissey disagreed, saying the millage increase could go up by about half a mill and still cover the shortfall.
“I really think to be responsible to the people who are suffering, we need to also look primarily at this year and do what we need to do this year,” she said. “Next year will be another year.”
The prospect of raising the rate has concerned several residents recently, particularly coming so soon after voters in March approved a five-year extension of the 1-cent Special Purpose Local Option Sales Tax, or SPLOST for education.
The bulk of the SPLOST, which will not take effect until July 2012, will go toward retiring the system’s 2005 and 2007 bond debts.
Official information released prior to the SPLOST vote said if it was not approved, the board “will have to increase property taxes to make the bond payments.”
However it appears the board will be raising the bond millage rate despite the tax passing.
During Thursday’s meeting, board member Nancy Roche addressed resident concerns, saying the sales tax and property taxes are not mutually exclusive. It takes both to pay down bond debt, she said.
Looking back at the presentations made on the penny tax, Roche said there “was a misconception out there that either you had SPLOST or you had a tax [increase].”
“Really it’s a combination,” she said, adding the message may not have gotten across. “They thought it was one or the other.”
Jones has previously said for the owner of a $200,000 home, a .5 mill increase would result in about $78 more in taxes annually. With the tentative levy increase, the owner of a $200,000 home is looking at an increase of more than $320. However, because most properties were reduced in value this year, the total tax bill might not raise much, or could even go down, despite the millage increase.
Cleveland said while anything can happen, it’s likely raising the rate to the full rollback this year is going “to guarantee that we’ll be in good shape so that we wouldn’t have to do it again next year.”