The County Council and school district of Beaufort County have been talking sales-tax plans for the past year, but it seems some crucial information may have been lost in translation.
Despite an informational campaign about the educational sales-tax plan, there is a lingering perception that it was concocted by the superintendent himself, in part because of lingering distrust of Jeff Moss and the school board after last year’s nepotism scandal.
Come November, both bodies are asking voters to consider 1 percent sales tax referendums in order to pay for their respective capital projects, like road improvements for the county and new schools and building upgrades for the district. If both pass, the county’s sales tax would increase from 6 percent to 8 percent during the life of both taxes.
But unlike the county, the school district has placed a second question on the ballot — a $217 million bond referendum question that would allow the school district to carry out its projects as needed, like taking out a mortgage on a home and paying it down each month. The board says it would pay down the new debt using revenue from the sales tax, which is expected to generate about $313 million over 10 years.
We’ve always fulfilled our commitments.
Phyllis White, Beaufort County School District chief financial officer
Doing so would reduce property taxes on the district’s debt service by at least 42 percent, according to the district’s financial adviser, Brian Nurick of Columbia-based Compass Municipal Advisors.
The district has held several public informational sessions about this plan, explaining each time that there are two questions on the ballot. But many people, including Beaufort County Councilman Rick Caporale, are saying they never got the memo.
On Tuesday, Caporale took to Facebook to say he hadn’t realized the school board had two questions on the ballot and to argue that there’s no guarantee the board will use its sales tax revenue to pay down debt.
Under the ballot question’s language, it can be used not only to reduce property taxes and pay down debt but to pay directly for the capital projects on the district’s $217 million list.
On Wednesday, district staff and Nurick both refuted Caporale’s claim that, if both questions pass, the board would have more than $500 million at its disposal — the $217 million in borrowed money and the more than $313 million in sales tax revenue.
“There’s a faction of people in Beaufort County, like there are most places, that just don’t want things to pass, and they’ll make up crazy things to not have them pass,” Nurick said, adding that “everyone would be voted out of office” if the school board broke that public trust.
He and Phyllis White, the district’s chief financial officer, also said the school board would almost certainly face lawsuits and an injunction if it failed to reduce property taxes on its debt by at least 42 percent, as promised.
“We don’t want anyone to not fulfill their commitments, and we’ve always fulfilled our commitments,” White said to a group of about 35 people attending a town hall meeting at Hilton Head Island High School on Wednesday evening. The town hall, the first of six held each semester, doubled as a sales tax informational session.
Caporale said Wednesday he stands by his argument, which he’d posted on Facebook under the title, “It’s Not What You Think/And It Had Me Fooled Too.”
“There’s nothing in the language that forces them to do what they say they’re going to do or not do the things they might conceivably do,” Caporale said over the phone. “I was just taking things to their logical extreme, to say, ‘Well, what would prevent them from doing that?’ ”
White explained Wednesday that the board cannot legally promise in its referendum question to lower property taxes by a certain amount. Doing so would cause problems with the agency that provides the district its bonds, she said.
Similar educational sales-tax referendums have been passed in five other counties in South Carolina — Horry, Charleston, Cherokee, Aiken and Anderson — since legislation was approved in 2008 allowing school boards to levy an educational sales tax. Under the law, the revenue can go toward capital projects listed in the referendum question, to pay down debt, or a combination of the two.
Nurick represents four of those counties and about 65 school districts statewide.
Still, a perception persists that Moss himself developed the plan.
“It’s ‘innovation a la Moss,’ ” Caporale said, referencing the director of innovation job that Moss’ wife briefly held in September 2015 and which led to one of two ethics violations against the superintendent last month.
On Wednesday, Moss maintained that he does not support or oppose the plan at Wednesday’s town hall meeting, despite prodding from several residents for him to take a side. Those residents included Citizens Advocating Responsible Education co-founder Richard Bisi, who also used the opportunity to attack Moss’ trustworthiness in the wake of the ethics violations.
There was a brief, heated exchange between Moss and Bisi before several district administrators spoke up in support of their boss and the topic returned to the referendum.
There are several possible outcomes depending on how the votes fall in November, White explained.
▪ If both questions pass, the district could pay for its projects as planned and would reduce the tax millage rate from about 32 mils to 18.
▪ If only the bond passes, the district would have to increase its portion of property taxes by about 10 percent to pay off the new debt, according to Nurick. The tax millage rate would rise to about 35 mils, he said. The district could not place another sales-tax referendum before voters again until November 2018.
▪ If only the sales tax passes, the district would need to rework its capital projects plan, because it would not have enough revenue on hand to carry out its projects as planned. Nurick said he would advice the district to look into why the bond referendum failed and place a version before voters again in the spring.
▪ If both questions fail, the district would present other options to the board to cope with student enrollment growth. That may include larger class sizes, modular classrooms, redistricting, and changes to which schools serve which grades. For example, a lower-capacity K-5 school may become a K-8 school, while an over-capacity high school may only serve grades 7-12.
“There’s a number of things that can be done, they’re just very unlikeable,” Moss said Wednesday of that last outcome.
Whether or not residents support the district’s list of projects, Caporale’s social media argument against the sales-tax plan resonated with a wide audience this week.
By Thursday afternoon, the post had been shared more than 35 times, including by pages like Greater Bluffton Republican Club, Bluffton Republican Headquarters and Beaufort County GOP.
It had also been read by at least three school board members, two of whom — JoAnn Orischak and David Striebinger — liked the post.
Reached Wednesday afternoon, Orischak said she’s heard similar concerns about the sales-tax plan in recent months and was glad to see Caporale engaging the community in a discussion about it.
“At the very least, it points to the fact that there are questions remaining, and this may be a very valid theory,” she said. “It’s the honor system. There’s a lot of trust that people have to place.”
The third member, however, wrote back that the councilman’s facts were wrong.
“While you may be opposed to it, spreading false information is very unprofessional,” wrote Joseph Dunkle.
Caporale says his main argument, however, was simply that many people have misunderstood that the school district has two questions on the ballot, and that it only needs its bond question to pass in order to pay for its capital projects.
If that happens, and the sales tax fails, “Make no mistake, this is sneaky-sneaky-sneaky,” Caporale said.
Understanding the referendum
The Beaufort County school board has placed two questions before voters on the November referendum. The first would authorize the board to issue $217 million of new debt through general obligation bonds, to pay for a list of capital projects. The second would levy a 1-percent sales tax expected to generate about $313 million over 10 years that could be used to pay down debt from capital projects bonds or pay directly for the $217-million list of capital projects.
▪ If both questions pass: The district could pay for its projects as planned and would reduce property taxes on its debt service.
▪ If only the bond passes: The district would have to increase its property taxes on debt service by about 10 percent. The district could not place another sales-tax referendum before voters again until November 2018.
▪ If only the sales tax passes: The district would need to rework its capital projects plan because it would not have enough revenue on hand to carry out its projects as planned. Financial advisers say the district should then place a bond referendum before voters again in the spring.
▪ If both questions fail: The district would present other options to the board to cope with student enrollment growth. That may include larger class sizes, modular classrooms, redistricting, and changes to which schools serve which grades.