Were your school taxes less last year? Renters could soon pay the consequences of that

As Beaufort County Council continued the process of approving the school district’s now-$254 million budget on Monday, another concern was present in council members’ minds — what effect that budget could have on renters and small businesses.

“I won’t vote for it at this point,” council member Brian Flewelling said. “My conscience is just telling me it’s not fair to the renters or to the economy of Beaufort County.”

Flewelling’s focus on renters stems from Act 388, a controversial 2006 state law which exempted primary residences from paying school operating taxes in favor of a one-cent sales tax increase. However, secondary residences, such as apartment buildings or vacation homes — along with businesses, vehicles and other properties — are still charged with school operating taxes.

While the act’s assessment structure is not new, the school district’s request for the maximum increase in taxes this year has some officials worried.

Paul Sommerville, a Beaufort County Council member who owns secondary residences, said the unbalanced structure places an unfair burden on him, and, in turn, on his renters.

“Right now, before this tax increase, the property taxes on properties I have are approximately four months’ gross rental,” Sommerville said at a June 3 finance committee meeting.

“The landlord’s not going to pay it,” Flewelling replied. “It’s going to be the tenant.”

The school district requested the maximum increase for its millage rate — the amount homeowners pay in property taxes — to fund this year’s operations, as well as an additional surcharge to make up for a predicted $8 million shortfall in property tax revenue.

The shortfall is the result of lower-than-expected tax income after the county reassessed property values last year. This is a regular occurrence in Beaufort County after reassessment; the school district experienced a shortfall of more than $5 million after the last two reassessments in 2014 and 2009.

“Now, somebody got a tax break,” school board member Richard Geier told the council Monday. “You roll back the millage, somebody paid less than they did the previous year. Now it’s payback time. We have to bring the millage back up so we can educate our children.”

Tonya Crosby, the school district’s chief financial officer, said the district’s request for a property tax increase would mean approximately 9 percent bump in school operating taxes, bringing its total collections to $158 million.

“We’re just trying to be made whole,” she said.

The increase in the millage rate would mean a homeowner of a $300,000 secondary home now paying $3,150 in school operating taxes would pay $270 more each year.

Upcoming votes

If the request is not answered, the school district’s reserve fund could dip below $20 million, less than the amount needed to operate for 30 days. Below this amount, the district would be placed on financial caution by the state department of education.

The council narrowly voted against the district’s initial request to raise the property tax rate on Monday, missing a required supermajority of eight “yes” votes by one.

However, at Tuesday’s school board meeting, interim superintendent Herb Berg said he believed — after a conversation with County Council chairman Stu Rodman — that the property tax increase has a chance of passing in August.

Berg, who said that he and Rodman had talked four times over the course of the day, said that the council was willing to approve the increase if it was spread out over two years, and if officials could wait to vote until more tax information came in.

“(Rodman) assured me that they are willing to go the full amount and the full max, and they want it to be as accurate as it can be, and that’s why the delay,” Berg said.

But at least one council member isn’t on board with Berg and Rodman’s idea of two 11-0 votes for the tax increase and the budget.

“I wonder where it ends,” Flewelling said. “What other things are we going to do to property owners?”

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Rachel Jones covers education for the Island Packet and the Beaufort Gazette. She attended the University of North Carolina at Chapel Hill, and has worked for the Daily Tar Heel and Charlotte Observer. Rachel grew up in Ayden, NC, surrounded by teachers.