ERWIN — A proposed funding cut in the 2013 federal budget could lead to a significant reduction in the amount of federal dollars the Unicoi County School System receives annually, and school officials are concerned about the impact this could have on programs and projects in the future if it is passed.
According to Dr. Mickey Hatcher, director of federal programs for the county’s schools, President Barack Obama has proposed a budget that would cut funding from Section 8002 of the federal Impact Aid Program. The purpose of this section is to reimburse school districts some of the tax revenue lost due to federal land ownership in the districts’ boundaries as no property taxes are paid on federal lands.
The allocation for Section 8002 in the 2012 federal budget was nearly $67 million, which is spread across approximately 240 school districts and affects around 2 million schoolchildren nationwide, Hatcher said. He said the 2013 budget proposal calls for eliminating this funding.
Hatcher sent a letter to U.S. Rep. Phil Roe’s office, as well as the offices of U.S. Sens. Bob Corker and Lamar Alexander voicing opposition to the proposed cuts.
“This would mean the federal government would pay nothing in property taxes,” Hatcher wrote. “This places a double burden on the taxpayers of the counties which are affected. The revenue that has been allocated for this program in the past has replaced less than 10 cents on the dollar but is vital to the educational programs in the schools.”
According to information from National Association of Federally Impacted Schools, the Impact Aid Program was first passed in 1950 with the initial intent of reimbursing lost tax revenues to the non-taxable status of military institutions. Later, the program began reimbursing school districts that are “imposed upon by a federal presence, whether it be military, Indian lands, low-rent housing, or other federal property.” Hatcher said at its outset, the program was fully funded and the government paid “dollar for dollar” on property taxes.
To be eligible for reimbursement under Section 8002, the government must have acquired the federal land in question on or after Jan. 1, 1939. Federally owned land must also comprise at least 10 percent of the school district’s total land mass, Hatcher said.
Currently, more than 55,000 acres of Unicoi County’s approximately 118,000 total acres are federally owned. As the U.S. Forest Service continues to acquire Rocky Fork property, the county could realize a further reduction in the amount of property on its tax roll, Hatcher said.
Unicoi County is one of five school districts in Tennessee that qualify for Section 8002 reimbursement, along with Stewart, DeKalb, Clay and Pickett counties. Hatcher said these counties receive a total of around $700,000 through the program, and the amount each district receives is based on that county’s allocation of its tax rate going to the school system.
Unicoi County schools began qualifying for the program in 1994. Although it is no longer fully funded and funding levels have been “up and down” over the years, Hatcher said the county typically receives around $200,000 annually in lieu of taxes through the program. This money comes without stipulations placed on it, unlike funding coming from other federal programs, such as No Child Left Behind dollars. If the program were still fully funded, Unicoi County would be federally reimbursed in the neighborhood of $6 million annually, Hatcher said.
“What taxpayer out here can say ‘I’m going to take a holiday this year and not pay my property taxes?’ ” Hatcher said. “Why does the federal government have a right to do that? They’ve only been giving you a portion of it all these years anyway, and now they’re saying we’re not going to give you anything.”
While Section 8002 reimburses only around 5 percent of lost tax revenue, Hatcher said it would limit the school system’s ability to complete items such school maintenance, services and larger capital projects if the funding is cut completely.
Unicoi County’s property tax rate is $2.5537 per $100 of assessed value, with around 85 cents of that going to the school system. Last year, a penny on the county’s tax rate was equivalent to approximately $29,000. Based on this figure, it would require a property tax increase of around 7 cents to replace annual revenues lost from Section 8002 funding.
“I don’t see the County Commission coming up with an extra $200,000 to give the schools,” Hatcher said. “So what’s that going to do? It’s going to limit programs and maintenance and all these other things it could be used for. Any kind of capital projects they could do in the future is limited because they won’t have the funding for it.”