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Hernando School Board leans against tax increase but keeps option on table

BROOKSVILLE — Pondering a tax hike in the midst of a recession is tough enough for politicians.

But deciding on whether to ask taxpayers for more money is even more difficult when the benefits are uncertain. That's the position Hernando County School Board members find themselves in.

Board members polled by the St. Petersburg Times after a budget workshop Tuesday said they aren't inclined to support a quarter mil increase despite a grim budget picture — but they still haven't ruled it out.

"I feel we need to find another way to do this than burdening the taxpayer," board member James Yant said.

The Legislature has given school districts the power to levy the additional quarter mil to help pay for operating or capital expenses. So far, Brevard County has decided to go that route; Pinellas County followed suit Tuesday when the School Board there gave its initial approval to the tax increase.

A quarter mil hike would tack $25 onto the annual bill of a $125,000 home with a $25 homestead exemption.

In a year when plummeting property values are starting to hit government coffers, the extra money could come in handy for school districts.

But for smaller districts with property values lower than the state average — like Hernando — the extra quarter mil might not translate to a quarter mil's worth of money.

Here's why: The state gives districts with lower-than-average property values an extra stipend to make up the difference. In Hernando's case, that supplement will pad the general revenue fund to the tune of about $2.4 million next year.

If the district raises more money through a tax hike, that supplement will decrease. But it's still unclear by how much, the district's chief financial officer, Desiree Henegar, told the board during Tuesday's workshop.

Based on an estimated $10.1 billion tax roll, the quarter mil could bring in about $2.5 million. But to know the actual benefit of the tax hike, the district would have to subtract from that figure the amount withheld from the state's property tax supplement.

The district could just be replacing state money with local tax money, Henegar said.

"That's something to consider," Henegar said. "Do you want to shift that down to local level?"

No, board members told the Times after the meeting.

While the prospect of losing a substantial amount of state money might make the decision easier, a majority left the option on the table if the situation turns out to be different.

"I'm still torn," board member Sandra Nicholson said.

"We would have to weigh what we would gain and what we would lose," board Chairwoman Dianne Bonfield said. "This county has felt quite heavily the downturn in the economy. I would be very cautious."

But Bonfield added: "Nothing can be ruled out at this time."

Board member Pat Fagan said he has all but ruled out the tax hike.

"With what's happening in the economy now, I can't support it," Fagan said.

Not that the district couldn't use more money.

Property tax revenue is expected to drop by about 10 percent, which translates to about $5.3 million less than last year. The preliminary tax rate has been set at 7.65 mils, or $765 for a $125,000 home with the homestead exemption.

The board must remember the state's tendency to adjust downward its own revenue estimates throughout the year, Henegar said. And the district estimates about 500 fewer enrolled students next year, which will cost $2.4 million in state money.

Henegar has recommended that the district cut 90 vacant positions. The positions were left vacant by retirements, resignations and certification issues.

They won't be needed anyway if the district's enrollment projections hold true, Henegar said.

Eliminating the positions would save about $5.1 million and allow the district to carry a general reserve fund of about $4 million, or 2.7 percent of the $169 million in projected revenues.

The Florida Department of Education recommends that ratio be kept at a minimum of 2.5 percent so school officials have enough cash on hand for emergencies.

If the fund drops below 3 percent, the state puts the district on a watch list. Below 2 percent, and the district must submit a fiscal recovery plan, Henegar said.

The state sent Henegar a sample form for a fiscal recovery plan. It lists categories for cost-saving strategies aimed at bolstering the rainy-day fund.

"The very first line item is staffing reductions," she said.

That prompted board member John Sweeney to speak up.

"That .25 mils to get our reserve fund balance up is looking better and better," Sweeney said.

Tony Marrero can be reached at tmarrero@sptimes.com or (352) 848-1431.

Hernando School Board leans against tax increase but keeps option on table 06/16/09 [Last modified: Tuesday, June 16, 2009 8:24pm]
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