Schools may be key to property tax relief

The Buncombe County Board of Commissioners held a nearly five-hour budget workshop May 16, a forum dedicated to presentations and requests from county departments. However, talks also showed a possible path toward nudging closer to a revenue-neutral property tax rate.

A taxing issue

County Manager Wanda Greene’s proposed budget for next fiscal year is $419,289,728, an increase of $5.7 million, or 1.4 percent, over the current budget. That spending plan also suggests a property tax rate of 55.9 cents per $100 of valued property, or $1,118 for a home valued at $200,000. While down from the current rate of 60.4 cents, it’s higher than the revenue-neutral rate of 51.3 cents, which would equal a $1,026 bill for a home valued at $200,000.

However, some potential breathing room was discussed in the form of two school systems the county helps fund. In particular, the Buncombe County Schools’ fund balance and A-B Tech’s designated quarter-cent sales tax could spell relief.

Finance Director Tim Flora noted that the county’s fund balance already has a built-in fund balance for BCS, meaning, the school system might not need to carry a fund balance, as it would be redundant. State law requires the county have a fund balance of 8 percent, while the county requires itself to maintain one of 15 percent.

Basically, a fund balance is a best practice allowing for an organization to operate for a month or two should all other funds become depleted. For example, according to Flora, the county’s $54 million fund balance would keep the county afloat for roughly two months.

Commission Chair Brownie Newman asked about the necessity of BCS’ fund balance.

“My perspective is that we carry the school’s fund balance. They are one-third of our operating budget. … They may have a different position,” explained Flora.

Later in the evening, BCS Superintendent Tony Baldwin gave his budget request presentation. BCS and Asheville City Schools split the amount of money given based on the number of students attending the respective schools. Baldwin’s request is for $74.4 million, an increase of $5.4 million from the current fiscal year.

BCS had a fund balance of about $11.3 million and Asheville City Schools had a fund balance of $7 million for fiscal year 2016.

Flora told Xpress, via email, “I do believe there are opportunities for collaborative solutions to our respective budget situations.”

“I believe that since education represents over a quarter of the county’s operating expenditures, the county’s general fund reserves are meant to address the school systems’ contingency or catastrophic needs.”

Meanwhile, Greene gave an overview of potential county revenue streams. That presentation gave way to hypothetical talks about altering the dedicated quarter-cent sales tax earmarked for A-B Tech capital projects. That tax was approved via a 2011 referendum and is slated to expire in 2029. However, the referendum’s language only approved the tax, not its purpose. That, according to N.C. General Statutes, can be altered by the Board of Commissioners.

To that end, Newman said he’d like to explore shifting its purpose toward maintenance and other campus needs. “I’d be supportive of that. Dedicating 100 percent to capital projects has been great, but I think having more flexibility would be useful.”

Commissioner Mike Fryar, who also serves on the A-B Tech board of trustees, said he’s not in favor of that idea. “That money is supposed to sunset.”

Newman countered, “I think we want to keep property tax rate as low as we can, and having flexibility within can help us keep property tax rate low.”

Commissioner Al Whitesides chimed in that he was also in favor of investigating the pivoting of the quarter-cent sales tax.

County staff told Xpress they anticipate closing the current fiscal year with $5.3 million available from the sales tax fund balance.

Earlier this year the community college asked commissioners for about $25 million from that sales tax fund in order to build a multipurpose facility. However, commissioners were not happy with the presentation and other issues surrounding A-B Tech, and upheld a moratorium on the quarter-sales tax funding that was initiated in January.

Outside of capital project requests, A-B Tech is asking commissioners for $7.8 million, an increase of $1.8 million from its current allotment from the county. That request would put $3.1 million toward salaries, $1.5 million for capital improvement projects and $1.7 million for utilities and preventive maintenance costs.

Whether or not the combined potential for eliminating the BCS fund reserve and pivoting of A-B Tech’s sales tax revenue could lead commissioners closer to a revenue-neutral property tax remains to be seen. Commissioners are not set to meet again until Tuesday, June 6, although much is still to be discussed regarding funding requests and the property tax rate.

During the June 6 meeting commissioners will take public comment on the proposed budget. The board has until June 30 to approve a spending plan.