Saturday, August 22, 2009

Bertie County
Board Of Commissioners
Oppose Taxes For
New High School

August 21, 2009 - For Immediate Release

On behalf of all five Bertie County Commissioners, we feel it necessary to respond to the unexpected action by the Bertie County Board of Education on Monday, August 17, requesting the County apply to borrow $25 million in QSCB (Qualified School Construction Bonds) for a new High School. According to our information, $87 million is available statewide in the current round of QSCB funding and based on our previous share of $1.23 million in the first round of funding, using the same formula our share would be less than $1 million. We believe the action by the Board of Education has raised unrealistic expectations and false hopes that Bertie County will be allocated $25 million, while all the other 95 eligible counties (the four largest counties receive their QSCB allocation directly from the Federal Government) will be left to fight over the other $62 million available.

On the previous Monday, August 10, Bertie County received Bond authority for $4 million in QZAB (Qualified Zone Academic Bonds) funds for high school renovations to be paid back over 15 years, and $1.23 million in QSCB (Qualified School Construction Bonds) funds for high school renovations and new construction to be paid back over 12 years. In July, at the time the commissioners approved the application for the $5.23 million stated above, the County Commissioners asked if we could afford the additional debt. The County Manager indicated that while the County has a strong fund balance in line with the Local Government Commission’s recommendations, and while the County might be able to absorb the additional debt service (3-4 cents on the tax rate) with an improved economy, the debt service on the new $5.23 million could require a small tax increase in FY 2010-11. Since that time, the General Assembly has passed a budget which the County anticipates will cost the County the equivalent of an additional 3 cents on the tax rate next year. While we hope the economy improves and revenues grow more than anticipated, at this time, our honest projections indicate that if the County were to borrow another $25 million to be paid back in 12 years, it would require approximately $2 million per year debt service, or the equivalent of a 20-cent tax increase.

This year, FY 2009-2010, Bertie County adopted an $18 million budget, which is about 7% less than the previous year’s budget. This budget included cutting 9 positions in county government. The budget in nearly every department in the county government was cut. In FY 2008-2009, the County, because of the reduction in revenues, particularly sales taxes, spent about $400,000.00 of our fund balance. In FY 2009-10, we again expect a further reduction in our fund balance. The only additional revenue source the County can generate is through an increase in property taxes.

The Commissioners have consistently shown their strong support for education, as evidenced by the 40% increase in School’s current expense funding over the last 4 years. This year alone, while the majority of counties cut or froze current expense funding, the Commissioners increased funding for the School’s current expense by 5%.

In recent years, the Commissioners have funded the renovations of all the elementary schools ($3.95 million in QZAB Bonds) and the building of a new $19 million middle school. The middle school debt repayment was to be paid in part with the new Lottery proceeds. In addition, just two years ago, the Commissioners borrowed $2 million dollars over 15 years in QZAB Bonds for renovations at Bertie High School, which will be repaid in full in 2022.

In July, the Commissioners agreed to apply for the $5.23 million in QZAB and QSCB funding as requested by the Board of Education to be used for renovations and new construction at Bertie High School. This was represented by the Board of Education as the first phase of a multi-phase project to make the old Bertie High School into a new Bertie High School. The multi-phase project was represented to the Commissioners as a project that eventually would replace or fully renovate all buildings on the entire campus. Despite the current economy and the fact that the Commissioners may need to increase taxes to fund the loan repayment, the Commissioners gave their support to the application for the $5.23 million in QZAB and QSCB loans. Since the QZAB funding will require a 15-year repayment term (until 2024), the commissioners wanted assurances and were told that the renovated Bertie High School, which included some new construction, would meet the needs of the system for the foreseeable future.

Since the Board of Education voted to apply for $25 million on August 17, no fewer than three members of the Board of Education have stated that they do not want to borrow the additional money if it requires a tax increase. Unfortunately, it would be impossible, in our opinion, based on all available information, to fund the debt repayment of $5.23 million, $25 million and the State’s new unfunded mandates without a tax increase of 20 cents or more. We believe that the Local Government Commission would not approve such a Bond issuance without a pledge in the application to raise the tax rate to fund the repayment. As much as the Commissioners support education, and support improvements in our facilities, we feel it would be devastating to our taxpaying citizens and to the future economic well-being of our county to become known as a county with one of the highest, if not the highest tax rate, in North Carolina. It is unrealistic to believe that we can add $2 million a year in expense, the debt service from the $5.23 million QZAB and QSCB bonds and the recent unfunded mandates from the State, without a tax increase of 20 cents or more.

We ask the Board of Education to take another look at the action taken on Monday, given the fiscal impact of its proposal. With the current state of the economy, the County’s borrowing capacity, the additional expense already created by the Commissioner’s commitment last month to borrow $5.23 million, new unfunded mandates recently put on the County by the General Assembly, and the current County shortfalls, the assumption of the additional debt created by borrowing another $25 million would be fiscally irresponsible. The creation of this debt would not be in the best interest of Bertie County citizens, and would require an unacceptable increase in the property taxes of the taxpayers of Bertie County. As we have in the past, we stand ready to work with the Board of Education to improve our school facilities in any fiscally responsible and prudent manner possible. Because of the burden that this additional debt would place on the taxpaying citizens of Bertie County, we have unanimously determined that we cannot support or sign the new QSCB application.

If you have any questions contact:
Norman M. Cherry, Sr. - Chairman
Bertie County Board of Commissioners


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