Editorials

Start the budget debate with agreed-on assumptions

Get ready for a repeat of the battle we saw last year between the Beaufort County School District and Beaufort County Council as budgets take shape in the next two months.

Even when the two agree on the amount to spend educating the county's children, they don't agree on how to come up with the money.

Last year, County Council approved the district's $175 million operating budget, and then sparks flew over what tax rate would bring in that amount and how much the school district should tap its reserves to balance things out.

To be fair, school district officials had a good point. If the tax rate for fiscal year 2010 brought in about $111 million, why expect that same tax rate to bring in about $116 million in fiscal year 2011?

The county's own collection rate shows that was unrealistic. The county is looking to make up a $1 million to $2 million shortfall in collections between now and the June 30 end of the fiscal year.

The reasons cited included homeowners switching from the 6 percent assessment rate to the owner-occupied rate of 4 percent. That switch eliminates school operating taxes from their property tax bills. County officials also said tax collections are coming in more slowly. Foreclosures and appeals on assessments also slow or change collections.

The county's financial reports show that the rate of property tax collections has been dropping since 2006. It hovered around 100 percent between 2001 and 2005. By 2009, it dropped to 93.3 percent and stands at about 96 percent for 2010.

For the school district, the story is similar. In fiscal year 2009, the budgeted amount for local property taxes was $116.8 million, but actual collections totaled $115.5 million, according to school district figures. In fiscal year 2010, the budgeted amount was $113.5 million, but collections totaled $111.1 million. Collections for fiscal year 2011 are projected to come in at $111.2 million, nearly $5 million off the budgeted $116 million.

The school board tentatively approved a $175 million operating budget earlier this month. That's the same amount as last year, but even with about $5 million in spending cuts, district officials say they'll need a 3 percent tax rate increase to balance the budget.

If past is prologue, that won't get far with County Council.

For a host of reasons, mostly political, officials tend to frame budget debates in terms of tax rates rather than dollars spent. We don't have a lot of discussion about what we should be spending money on nor how much we should spend.

That fixation on rates can lead to gamesmanship. It becomes a battle of assumptions rather than a debate on how best to serve the taxpayers. That's certainly what we saw in last year's debate on the school budget.

For the sake of accurate budgeting -- and in turn more responsible spending -- the county and the district should agree to some basics before this process gets too far along. That includes a realistic, conservative valuation of how much money a given tax rate will bring in, a recognition of the rate at which money is coming in and agreement on the appropriate percentage of the operating budget to hold in reserve for emergencies and to maintain good financial ratings for borrowing.

We need reality-based budgeting that takes into account the very real likelihood that the tax base in Beaufort County will decline when we go through reassessment in 2012 and the limitations under state law on raising tax rates.

Don't let one aspect -- tax rates -- skew the whole discussion.

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