Director of Schools Ron Dykes recommended the new option to the board, which diverts three pennies into the district’s budget from property tax collections headed to the county’s debt service and takes $1 million from the system’s reserves to balance the $62.7 million budget.
After Dykes’ recommendation, the school board gave little public consideration to the budget proposed last week by the county’s Budget Committee, which transferred two pennies to schools and asked the district to increase its sales tax collection projections by 1 percent to balance the budget.
“The concern that we have is that ... even though we were up in July, these latest numbers are $10,000 below expectations,” Dykes said referencing historical data showing sales tax collections. “It’s not my recommendation that we increase projected sales tax 1 percent, but we go back and ask for the transfer of three pennies.”
Out of the 9.5 percent local sales tax, the state keeps 7 percent. Half of the remaining 2.5 percent goes to school systems and half goes to the jurisdiction in which the tax was collected, but local municipalities often send a bit more to schools.
In the 2012-13 fiscal year budget, county schools budgeted for $14.2 million in revenue from the local option sales tax, but only collected $13.5 million.
This year, the system projected $13.7 million from sales tax, but the last proposal from the county recommended a $135,598 increase in expectations.
By choosing the 3-penny option, Dykes said the board could be sure that the money would be available to the district instead of relying on market trends.
County Mayor Dan Eldridge, who attended the school board meeting, said he believes the Budget Committee will approve the latest proposal from the schools.
“I fully support this,” Eldridge said. “What Mr. Dykes is discussing, particularly in light of what we’ve seen in the first two months, the pennies are real money. The sales tax may or may not materialize.
“From your perspective, I think the three pennies is the way to go,” he added. “I support that, and I think that you will find support from the commission as well.”
To produce the school system’s budget, 10 instructional positions were cut, but that still left a $1.5 million deficit.
This proposal closes the gap and leaves the district with about $2.8 million in reserves, $950,000 more than the state requires the schools to retain.
The county Budget Committee will meet Friday at 4 p.m. to consider the school’s proposal.