BROOKSVILLE — The school tax rate will decrease in Hernando County this year even if the School Board uses its new power to tack on an additional quarter mill.
The district is advertising a tax rate of 7.72 mills, or $772 for a $125,000 home with a $25,000 exemption, Chief Financial Officer Desiree Henegar said Tuesday.
That's slightly lower than last year's rate of 7.77 mills. But the advertised rate includes the extra quarter mill — 25 cents for every $1,000 of taxable property value — that the state Legislature has allowed school boards to levy.
Without the additional levy, the tax rate would be 7.47 mills.
The tax rate is a little lower than projected because property tax rolls didn't shrink as much as officials had feared and because the district won't have to tax to pay for debt service this year.
School boards can pass a final millage rate that is lower than the advertised rate but not higher, so the optional quarter mill was included to offer some flexibility, Henegar said.
But she said the board would be wise to avoid the option.
While the extra quarter mill would on one hand bring in an additional $2.5 million for the district from local taxpayers, Henegar points out that state officials say it could cost Hernando some $1.6 million in so-called compression funding next year. The money is doled out to compensate districts whose property values are lower than the state average.
If that figure holds true, the district would actually come out only about $880,000 ahead with the additional quarter mill levy, Henegar said.
"My recommendation is we can find $800,000 elsewhere and look at cutting budgets somewhere else rather than stick it to the taxpayer," she said.
That amount of money would still make the quarter mill worthwhile, said Joe Vitalo of the Hernando Classroom Teachers Association.
"That's $800,000 more than we had to support programs for our students," Vitalo said.
Vitalo started lobbying the board months ago, urging them to take advantage of the additional levy to help a tight budget.
He argued that while the tax rate might go up, taxes actually paid wouldn't increase substantially or at all because property values have dropped.
Vitalo said Tuesday that the union's stance is bolstered by the fact that the tax rate would still be less than last year even with the additional quarter mill levy.
While that may be true, School Board members will still have to find the political will to raise the tax rate in a recession.
Board member Dianne Bonfield said she is leaning against the tax increase because of the severity of the economic downturn.
"I think we can look very judiciously at the budget and see where we can pick up that money," Bonfield said. "These are unprecedented times."
Not that the district couldn't use the extra money.
The district has projected expenditures of $154.2 million next year. The unreserved fund balance is $7 million, or about 5 percent of projected revenues of $152.6 million. The state recommends at least 3 percent.
But the district will have to return about $2.2 million in state money for a projected attendance drop of 500 students, and use about $3.5 million to operate the new high school in Weeki Wachee that opens next year, Henegar said.
That leaves about $1 million in the rainy day fund, or about 0.74 percent of revenues, Henegar said.
"In my eyes, 0.74 percent is woefully insufficient for those unknowns out there," she said.
The public will get its first chance to weigh in at 6 p.m. Tuesday, when the board will hold the first of two budget hearings. The hearing will take place at district headquarters, 919 N Broad St. in Brooksville.
The second hearing is slated for Sept. 15. The board must submit a final budget to the state by Sept. 18.
Tony Marrero can be reached at [email protected] or (352) 848-1431.