Tax Increase Seems Likely
By Alex Saitta
November 22, 1963
December 3 Update: Last night the bond analyst attended the school board meeting and confirmed what I wrote below. Baked in the cake from the November 2006 Greenville Plan vote, the bond payment next year will rise by $2,003,804. The value of a bond mill is $449,306. Doing the division, and the anticipated tax increase next year is 4.5 mills.
December 5 Update: I think the reassessment will raise tax rates on the lower priced homes next year as well. Here are some numbers that will help illustrate how I think the reassessment will shake out.
Overall, I think property valuations will be down about 10% on average in the county. So the tax rates will roll up 10%, as required by law to keep the reassessment revenue neutral.
I believe homes $150,000 and below will see no change in assessed values. Higher priced homes like $300,000 will see their valuations fall 5% to 15%. The very high priced home have taken a beaten and their valuations will fall 30% or more.
Those typical county residents living in $150,000 or less homes will see a tax increase due to the reassessment. Why? The value of their homes will be flat, and the tax rate will rise about 10% due to the rate roll up.
Those who live in their homes don’t pay school operations taxes and only have to worry about school bond taxes. That bond rate will roll-up about 10% or by 5 mills. Add that to the increase due to the higher bond payment next year (see Dec 3 update), and you are looking at a bond tax rate that rises from 52.5 to above 60 in 2014.
Houses above $300,000 and above will probably have a wash tax-wise because their assessed values will fall about as much as the tax rates roll-up. Those in the very high priced homes and will see a cut in their tax bill fall because their valuations will fall much more than the rate is rolled up.
After reading an article where I discussed the rising debt service of the school district the Seneca Journal wrote an article and I responded to it.
I read the story entitled, “Saitta: Tax increase ‘likely’ in 2014-15.” Reading that headline, one might get the impression I’m happy about that or I had something to do with it. Neither is true.
In 2006 the school board majority voted to borrow about $350 million to renovate and build new schools in Pickens County. I voted against that for a variety of reasons, arguing the construction plan was excessive in size and scope and the way the bond deal was structured would be harmful in the long run. At a recent school board meeting, I pointed out we are continuing to feel some of the harm I warned about years ago.
In 2007, the first scheduled bond payment was purposely small (interest only) at $15.9 million. Even though the district did not borrow any more money, the bond payment rose the next year. It has continued to rise. Last year the payment was up to $24 million and this year it is $24.7 million. Next year it will rise to $26.7 million. This rising payment schedule was by design, by the board members who crafted the plan in 2006.
This year the bond tax rate was 52.5 or the same as last year. The payment went up $700,000. Total assessed value of property rose proportionally, so there was no tax increase.
Next year the taxpayers of Pickens County might not be so lucky, because the bond payment rises about $2 million. Given the value of a mill is about $430,000, and growing very slowly, likely there will be a tax increase to cover the rising payment.
That tax increase (like the other increases in the wake of the $350 million loan) was baked in the cake by the 2006 school board that borrowed all of this money and structured the deal so the bond payments rose over time.
Normally, you structure a loan so the payment is flat or goes down over time, so if you need to borrow money in the future, you can without undue burden. With the bond payments rising over time, borrowing any money remains out of the question and this has generally handcuffed the boards of 2010 and 2012 as we deal with on going capital repair needs like roofs and HVAC’s.
School Board Trustee — Pickens