2017-09-13 / Front Page

Letcher Schools facing additional loss of $806,000 after tax decision


Letcher County Schools are facing more budget cuts after the county board of education had to choose Tuesday night between losing $806,000 and raising the property tax rate by 48 percent.

The board chose to keep the rate the same as last year, but that means the district will have nearly $1.5 million less to work with this year, after unmined mineral taxes fell by more than $700,000 and county property assessments dropped by $215 million in one year.

Board Chairman Will Smith said the drop in coal assessments is responsible for nearly all of the drop in assessments.

“I’ve been on the board 25 years and I’ve never seen anything like this,” Smith said.

The state Revenue Cabinet sends districts computations every year that tell the board of education the “compensating rate,” which would give the district the same amount of money as the previous year, and the “4-percent rate,” which would increase revenue by 4 percent over the previous year. The district had a rate of 63 cents per $100 of assessed value on real property last year. The compensating rate would have required a rate of 93.2 cents.

“To get the compensating rate, which gets us the same money as last year, we’d have to raise the tax rate 30.2 cents, which is unbelievable,” Superintendent Tony Sergent said.

Sergent recommended the board approve the same rate as last year, and then add 0.4 cents to make up for tax bill exonerations. He said he could not recommend raising taxes by 48 percent.

“You just can’t do it. The money’s not there,” Sergent said before the meeting.

Sergent told board members at the meeting that Letcher County increasing the rate to what the state recommended would cost a taxpayer with a $100,000 piece of property $300 more a year, and would cost the district $806,000 if they didn’t increase it.

“That’s not for the next year, that’s forever,” he said.

Sergent said what really hurts is that most of the minerals are owned by out-of-state companies that are “sitting on the land” and won’t sell it or use it. Board member Robert Kiser said there should be some way to recoup that money if things change.

“You know if the market was to pick up any at all, they’d try to come back and permit that property they’re not paying taxes on,” he said.

Sergent said he made a list of $1.7 million in cuts he wanted to make when he was hired, and most of those had been made. While that put the district in better financial condition than some others in the surrounding area, it’s still going to hurt to make the cuts that are needed. On top of that, he said he expects the state to begin requiring local districts to make a larger contribution to classified personnel retirement, and expects cuts in “Flex Funds” from the state that are used to pay for Extended School Services, textbooks, and other vital needs. He said he and other eastern Kentucky superintendents met with the Revenue Cabinet and legislators last week and were assured that the main school funding, known as SEEK funds, would be protected, but he said that only leaves the Flex Funds to cut.

“The governor told the (education) commissioner he wanted him to cut $69 million out of education and not touch SEEK funds, so I don’t know where else it’s going to come from,” Sergent said.

Board member Mindy Boggs was also reluctant to choose the lower rate.

“I don’t want to take anything away from the kids, but if we raise the taxes, we’re going to be taking away from the kids at home, too,” she said.

Board members and Sergent said they hope the freefall has stopped, because the district will have to take at least the compensating rate next year to continue to qualify for other funding from the state. Smith said the district will have to “show local effort and take that, or you’re going to miss out.”

Sergent said he “can’t imagine property values falling any more. I can’t see how they can, but I’ve been wrong before.”

The board voted unanimously to approve the tax rate of 63.4 cents on real property and tangible property, 49.6 cents on vehicles and a 3 percent utility tax.

It also voted to approve a 4 percent commission for the first month of tax collection by the sheriff, and a 3 percent commission for the following months.

In other business at the special meeting, the board voted to allow Letcher Middle School to host a wrestling event by Appalachian Mountain Wrestling on September 30 as a fundraiser for the school, and to allow Southern Style to sell snow cones as a fundraiser at Letcher Elementary on Fridays for the remainder of the year.

The board also voted to pay $2,813 to join the Kentucky School Boards Association in opposing a rate increase by Kentucky Power Company. Sergent said he did not know how much the proposed increase would cost the schools, but “it would be a lot.”

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