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TAX ISSUES
Millage rates, budget requests, shortfall notes, and tax
increases can be complex issues to understand. The
Itawamba County School District would like to take this
opportunity to explain how the current millage increase
issue has become what it is today.
Budget Increase Request for 2011-2012
The Itawamba County School District has requested a total
increase in its 2011-2012 budget in the amount of
$160,654.* During the 2010-2011 fiscal year, the
School District operated on a budget of $27,218,452.
For the 2011-2012 fiscal year, the School District has
proposed to operate with a total budget of $27,379,106.
This means that the School District's total budget is increasing less
than 0.6%.
Of this total proposed budget, 24.39%, or $6,679,756, will
come from local ad valorem tax dollars which the Itawamba
County School District receives from the local taxing
authority, being the Itawamba County Board of Supervisors.
The State of Mississippi requests that all school districts
obtain between 20-30% of their budget from local ad valorem
tax dollars.
Facts that Itawamba County citizens should know about the
millage increase:
1. The Itawamba County School District's fiscal year runs
from July -June. Each year the School District requests a
specific amount of money from the local taxing authority
(Supervisors). This is the amount of money necessary to
meet the School District's annual budget. It is then the
local taxing authority's statutory obligation to set the
necessary millage to generate the amount requested by the
School District.
2. For purposes of this article, a "shortfall note" is a
loan that the School District had to obtain because the
School District did not receive the amount of money
requested because the local taxing authority did not set the
millage at the correct level.
3. At the end of the 2007-2008 fiscal year, the local
taxing authority shorted the School District $119,907 in its
tax request. The explanation given by the local taxing
authority was that they accidentally set the School
District's millage too low. The Itawamba County School
District chose not to obtain financing from a shortfall note
to cover this shortage. In doing this, the School District
forever lost this money, but it saved the taxpayers the
interest costs of a shortfall note.
4. At the end of the 2008-2009 fiscal year, the local
taxing authority shorted the School District $438,944 in its
tax request. As a result, the School District had to obtain
a shortfall note in the amount of $320,975 to help cover the
shortage. The difference in the shortage and the loan was
refunded to the School District by the local taxing
authority because the local taxing authority erroneously
charged the School District a collection fee of $117,969.
As a direct result of the local taxing authority not
collecting the proper amount of money, the School District,
and therefore the taxpayers, will have to pay $25,434 in
interest on this note that they would not have
otherwise had to pay. Additionally, the School District has
to pay the principal payments each year, which increases the
amount it requests from the local taxing authority each
year. The Itawamba County Times reported in a July
13, 2011 article that "The school board recently published a
public notice announcing its intent to raise its ad valorem
tax millage by more than $688,000." For clarity, the more
than $688,000 figure includes the principal payment and
interest that should have been collected in previous years.
The principal payments are as follows: 2010 - $102,913; 2011
- $106,939; and 2013 - $111,122.
5. At the end of the 2009-2010 fiscal year, the local
taxing authority shorted the School District $295,416 in its
tax request. This forced the School District to obtain a
shortfall note in the amount of $295,416. As a direct
result of the local taxing authority not collecting the
proper amount of money, the School District, and therefore
the taxpayers, will have to pay $17,059 in interest on
this note that they would not have otherwise had to
pay. As with the 2008-2009 shortfall note, the School
District has to ask for the principal payments each year
further increasing the amount it requests from the local
taxing authority each year. For clarity, the reported more
than $688,000 figure includes the principal payment and
interest that should have been collected in previous years.
The principal payments for this note are as follows: 2011
- $95,595; 2012 - $98,433 and 2013 - $101,377.
6. At the end of the 2010-2011 fiscal year, the local
taxing authority shorted the School District $692,292
in its tax request. The Itawamba County School District
does not know yet exactly how much money will be obtained in
a shortfall note, but it will likely be the majority of this
amount. The School District estimates the amount of
interest on this note, which will inevitably be paid
by the Itawamba County taxpayers, to be $54,857. And again,
the principal payments and interest, which are unknown at
this time, will be added into the tax request for the next
three years.
7. When the millage was set for the 2010-2011 fiscal
year, it seemed obvious that the millage would again be too
low. As in preceding years, representatives from the
Itawamba County School District had discussions with the
local taxing authorities and representatives of the local
taxing authorities regarding this continued problem. The
Itawamba County School District was assured that the local
taxing authority felt certain that the money would be
collected this year (2010-2011). At this time, the local
taxing authority was advised that this continual refusal to
meet their statutory obligation was only harming the
taxpayers of Itawamba County. In an effort to support
community harmony and in an effort to trust that the local
taxing authority would do what they said they would do, the
School District patiently waited.
8. The local taxing authority has a statutory obligation to
access the correct millage, which Mr. Gary Franks referred
to in the recent Itawamba County Times article.
9. The total estimated interest that these three shortfall
notes will cost the taxpayers of Itawamba County is
$97,350.
10. School districts all over the state are getting less
and less money from the state level, and the state is
expecting that difference to come from local funding. One
prime example is the Ad Valorem Tax Reduction Grant. Every
year before a school district makes its request to its local
taxing authority it subtracts from that request the Ad
Valorem Tax Reduction Grant. The grant is actually money
given to the local schools by the State of Mississippi for
education. Since 2001, that money has ranged between
$344,000 and $359,000 annually for Itawamba County. In
2010, it was $344,962. So in 2010, when the School
District made its request to the local taxing authority, the
School District was simply able to subtract $344,962 from
that request. In 2011, the State of Mississippi reduced the
grant amount to $59,550. In 2012, the grant will be
further reduced to $15,006. This is another reason
for that $688,000 figure. The Itawamba County School
District is not getting the $300,000 plus funding from the
State that has always been given to offset the amount
requested from local taxpayers.
Hopefully the above information will help clarify the
complexity of the $688,000 request; help clarify why it has
to be made; and help explain how this is a problem that has
grown due to the correct millage not being set year after
year.
*All numbers are rounded.
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