THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Saturday, February 22, 1997 TAG: 9702220275
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: CATHERINE KOZAK, STAFF WRITER
DATELINE: MANTEO LENGTH: 84 lines
When all fiscal factors of the proposed $59.5 million school bond are tabulated, Dare County property owners could be looking at a peak tax increase of as much as 47.5 percent.
At a workshop the Dare County Board of Commissioners held Friday to discuss the bond, County Finance Director David Clawson said in addition to financing the bond debt, the county must fund school operating costs and compensate for depletion of the county budget fund reserve.
The Board of Education proposal does not include operating costs of a new high school and new elementary school in Manteo, estimated at $1 million annually.
And the county should have at least 25 percent of the general fund balance on hand to contend with county emergencies, such as hurricanes.
``This is really the only insurance policy we have to deal with that,'' Clawson told the board.
Clawson presented a breakdown on the proposed bond, calculating amounts based on a 15-year bond term and a 20-year term.
In his estimate of the tax rate when all costs are added, taxes in 1998 would rise 9.19 cents, or 7.61 cents per $100 of property valuation. At their highest in 2000, the taxes would be an additional 18.98 cents with a 15-year bond term, or 16.94 cents with a 20-year term.
By 2013, the last year of the 15-year bond, the rate would have slid back to 8.87 cents per $100. With the 20-year bond, the rate would be 3.92 cents by 2018. At its peak, the 20-year plan could raise resident's taxes nearly 43 percent. The peak in a 15-year-payoff would be 47.5 percent.
But, Clawson warned, those figures are just estimates.
``I'm going to preface this with that every number you see in here is going to be wrong,'' Clawson said to the board as he began his presentation. ``But it's my best guess.''
The county tax is now 40 cents per $100 of value, with residents of Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head and Manteo paying additional municipal taxes.
Board Chairman Robert V. ``Bobby'' Owens Jr. said about $11 million in interest costs could be saved if the county went with the 15-year bond, since there is less time on the principal to charge interest.
Clawson agreed, but added that the down side to saving millions over the years is charging taxpayers a higher property tax.
Since bond referendums are subject to many laws, Clawson and bond counsel Don Ubell explained some of the restraints the county would be held to if it decides to go out to what is called a general obligation bond referendum.
For instance, the county will not be able to make more money on investment of the bond money than the debt interest rate, Clawson said. Although there are ways to get around the rule, the county would be risking a hefty penalty.
Clawson said the final tax rate will incorporate what is remaining from the previous $27 million in school debt. ``It will be structured so the combined total will be declining,'' Clawson said.
But one problem in figuring the debt obligation by the county is that the county has not received a cash-needs schedule from the Board of Education, which hampers calculation of the timing and size of the the debt issues and debt service, Clawson said.
``That has a large, very significant effect on when we'll need to have the money at hand and need to start paying the debt,'' Clawson said.
Educators have not addressed funding of school technology costs, changes in operating costs after additions for projects other than the new high school and Manteo K-2 school, costs for library automation, and costs for administration, Clawson added.
Commissioner Geneva Perry added another option to the brew, suggesting that the county could break out the less controversial parts of the school projects - repairs and renovations of and additions to buildings - and fund them through certificates of participation (COPS), which would require no voter approval.
The new high school and Manteo elementary school would then be the only portions of the proposal put on the ballot for a referendum May 20. COPS allow funds to be set after bids are accepted, unlike bond referendums.
Clawson and Ubell said the idea is possible under the law, as long as the county commission deals strictly with what the Board of Education has requested. Clawson said Pasquotank County has had good luck with COPS because the program prevents districts from getting caught short by underbidding by contractors.
``It could be structured any way you wish,'' Clawson said, but said it could be a little more complicated. ``In order to have a resolution ready for you on March 5, we have to have time to get ready for this.''
The board has to decide by then whether to put the bond issue on the ballot.