Editorials

District tax questions can, must be settled

    Math, the law and a contract between Beaufort County and the school district can settle a debate over the school district's tax rate and whether the district has been shorted money by the county.

The county and the school district have smart financial minds working for them. The numbers can be crunched. Figuring out exactly which numbers should be plugged into the formulas required under state law is doable. The county and municipalities have been through a similar exercise with other tax-increment financing questions.

This issue isn't a matter of philosophy on taxation or fiscal independence for the school district or whether the school district spends its money wisely -- although there's a strong temptation to make it about that.

It's a matter of following the law and abiding by the terms of an agreement the county and the district signed in 2002 when a special tax district was created to pay for two new college campuses.

That agreement is clear in its intent to keep the school district from losing money as a result of the special tax district.

It states: "The council and the school district mutually agree that the school district shall not sustain a loss in revenues as a consequence of the New River Redevelopment Plan and the issuance of TIF obligations."

And importantly, that was to be accomplished by adjusting the district's tax rate, which is set by County Council.

What has muddied that intent over the intervening years is a change in how school district operations are funded. The Property Tax Reform Act of 2006 took a complicated process and made it more complicated, substituting resident homeowner property taxes with sales tax revenue to pay for school operations. In 2009, the county reassessed real property countywide, adding another twist to the issue.

It may be that formulas haven't kept up with the changing law. Perhaps what was explicit before is now open to interpretation because of different circumstances. Lawmakers have a tendency to change one section of the law without reconciling it with other sections -- at least not until problems crop up.

The county and school district have reached agreement on one significant point: The district is owed money on a per-student basis for the 148 children who now live within the boundaries of the special tax district. There were no schoolchildren there when the tax district was created.

On Monday, County Council agreed to add $1.2 million to the school district's budget and to take that money from the tax district account.

That seems fair. They are looking to state law on tax increment financing to make that adjustment, not to the specific agreement between the county and the district.

Still at issue is how the county rolled back the tax rate for the school district in 2009 after the tax base jumped higher with the reassessment. The district contends a key number plugged into the formula to calculate the rollback was incorrect because it didn't include the money diverted by the tax-increment financing district.

That must be sorted out, and it will be over the summer before the county sets the tax rate.

Last Monday's vote on the school district budget by no means settled this, and County Council's Finance Committee Chairman Stu Rodman recognized that going into the meeting. Rodman said, "As a practical matter, I don't see us resolving that Monday evening."

School board members should have recognized that, too. Talk about the county's not honoring its agreement was premature. The district, which has seen its tax rate increase over most of the time this agreement has been in place, has not pushed the point in previous years as it is doing now.

Superintendent Valerie Truesdale hit the right note: "I think the fighting is so detrimental to this county. We are honor-bound to say, 'OK, let's get to something that we can all agree is truth.'"

This can be figured out, and it can be done without rancor.

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