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Funding School Bldg Program/Effect on Prop Tax

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Funding School Bldg Program/Effect on Prop Tax

Postby Don Miller » Thu Jul 08, 2010 1:01 pm

Tracy will be working to determine how much money we can borrow right now without a tax increase, given the expected balances in School Debt Service Fund 156. The School Board has a new cost estimate for Loudon Middle/Philadelphia and is awaiting a new estimate for Greenback.

So all of the following estimates and numbers should be considered preliminary and subject to change when better numbers are available. With that caveat, I thought I'd take a rough shot at what the implications are for a tax increase in 2011/2012.

First, I think there might be enough money in Fund 156 to borrow about $10M today without a tax increase (subject to Tracy's official calculations). To carry out the entire school building program (of about $48M) will definitely require a tax increase.

Second, we are drawing down the General Fund 101 at a rate of about $1.3M per year. This is not an immediate problem since Fund 101 balance is now pretty high. However in a couple years, it will be a problem. CTAS recommends a minimum balance in Fund 101 of about $4.4M. We'll reach this in a little over one year (2011/2012 fiscal year). I think CTAS is a bit conservative but even then it will only be 2 or 3 years before our balance gets too low. So if we approve a tax increase next year to fund the building program, we also need to deal with the declining Fund 101 balance. For this purpose, I'm assuming we will need to put an additional $1.3M per year back into Fund 101 (maybe could get by with somewhat less)

The latest estimate for Loudon Middle/Philadelphia projects is about $18M (vs. about $14m in an earlier estimate). An earlier estimate for Greenback was about $28M. We don't have the latest Greenback estimate yet, but based on the Loudon experience I'm assuming it will be more than $28M (say $30M). I also assumed a 25 year loan at 4.5% interest (maybe we can get better terms?)

Based on these assumptions a future tax increase might look like the following: Please note that I am no big fan of tax increases and have voted against several items this year in order to keep any tax increase as small as possible.

Fund another $8M loan for Loudon/Phila Schools --- 4¢
Fund Greenback ($30M loan) --------------------------- 14¢
Fix Fund 101 Draw Down -------------------------------- 8¢
Additional School Operating Expenses ---------------- ??

Total -------------------------------------------------------- 26¢
plus any additional school operating expenses (I would hope the schools would not ask for any more operating money but history certainly has not borne this out).

As I said, all of the above is based on a number of assumptions but it at least gives some perspective to what we'll be facing a year from now.
Don Miller
 
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Joined: Thu Apr 15, 2010 8:58 am

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