Beaufort County schools will borrow as much as $100 million to cover late tax bills
Beaufort County’s Board of Education has approved borrowing up to $100 million to “keep the lights on” as it waits for the county to issue its delayed tax bills.
The board also voted Thursday night to pursue legal action to recoup the cost of this borrowing, estimated at $350,000, in the aftermath of a contentious lawsuit between the county council and Auditor Jim Beckert.
The district relies on Beaufort County Council to approve its $250 million-plus annual budget every year and to provide the tax money to pay for it. The taxes, with a rate set by Beckert, represent approximately $150 million of the budget.
Typically, the county sends out tax bills by Nov. 15 and collects taxes by Jan. 15. The district receives funding for its two accounts — operations, which covers payroll and other day-to-day expenses, and debt services — in January and February.
The district normally issues a “tax anticipation note” of about $14 million in summer or fall to cover expenses until the tax revenue comes in, bond counsel Frannie Heizer said Thursday.
But due to the delayed tax bills, the district isn’t expecting that revenue until March — and as a result, the schools need to issue a much larger tax anticipation note than normal to cover an anticipated debt payment of $67 million in February, along with the repayment of last year’s $14.3 million tax anticipation note.
Without any borrowing or revenue, those payments would leave the district’s accounts with an estimated $100 million deficit, district chief financial officer Tonya Crosby said Thursday.
Crosby said borrowing $100 million is a “worst-case scenario,” and the amount will likely be reduced as more information comes in from county officials. The district received approximately $30 million in tax revenue in December, and though the exact amount is still being calculated by the county, an amount “in that ballpark” will be subtracted from the total of the tax anticipation note, she said.
Heizer said the district could receive the borrowed money as soon as February to repay in June.
With interest and fees, the district will pay about $350,000 to receive and pay back the tax anticipation note, financial adviser Chad Cowan said.
The board voted 10-1 to authorize the borrowing, with William Smith as the lone “no” vote.
Burton representative Richard Geier made a second motion to pursue legal action to recoup the cost of issuing the tax anticipation note, describing it as “a shot across the bow” at county government.
“This is not our fault,” he said. “This is something that has to do with a conflict between the auditor and the county council, and it will not be resolved for some time. Unfortunately, dysfunction at the county level has a cost, and that’s about $350,000 that is not in our budget.”
He added that legal action could take several forms ranging from a demand letter to a lawsuit, though he said “I don’t think it will come to that” and that if he were on county council he would increase the district’s tax rate next year to make up the amount.
The board passed that motion 9-2, with Smith and Rachel Wisnefski voting no. Both said they thought the action was premature.
The board will receive an update on the tax anticipation note at its Jan. 19 meeting.