published Wednesday, April 13th, 2011

PILOT money for schools may not be a windfall


by Dan Whisenhunt
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    In this file photo, Hamilton County Trustee Bill Hullander stands in the stock room of the current Trustee's satellite office in the Bonny Oaks Industrial Park.
    Staff file photo by Tim Barber/Chattanooga Times Free Press

Although Hamilton County officials want to spend payment-in-lieu-of-taxes money on school construction, now there may not be enough.

On Tuesday, a committee made up of county and school officials began hammering out the details of how the county will spend money from such agreements, known as PILOTs.

The agreements are property tax breaks that excuse companies from tax bills for a period of time except for the portion of the tax that goes to schools.

County leaders want to keep that money to fund school construction, while school officials want to add it to their general budget.

But now the PILOT money may not provide the windfall officials were expecting because there was some miscommunication about how much money the PILOT agreement for the new Volkswagen assembly plant would bring in.

While initial estimates given by school officials said Volkswagen would generate $6 million in PILOT funds, the county has only collected $835,724 from Volkswagen as of the end of February, according to the County Trustee’s Office.

Trustee Bill Hullander reported Tuesday that the total amount held from all county PILOT agreements may not be more than $1.2 million by June 30, the end of the current fiscal year.

That’s not enough to pay for any new school construction, officials said.

County Commissioner Chester Bankston, who attended Tuesday’s meeting along with several other county officials, said once the Volkswagen production is in full swing, there will be more money coming in.

But county Administrator of Finance Louis Wright said it will be “significantly less” than $6 million.

Officials at the meeting could not provide firm estimates.

School Superintendent Jim Scales said he still would like to see the PILOT money, whatever the amount, put back into the school system’s operating budget. The school system is facing a $14.3 million shortfall for its upcoming budget.

Commission Chairman Larry Henry said the commission could use the PILOT dollars to fund other school emergency needs besides construction, including textbooks.

“What we’ve got in PILOT money is not going to build schools anyway,” Henry said. “We would like to see that money used for facilities or capital improvements.”

According to the commission’s resolution setting aside the PILOT money, the money could be used for anything the commissioners think the schools need.

The commission’s resolution from February, which outlines the plan for the PILOT funds, says the money will be “segregated and designated exclusively for the capital improvement, maintenance, acquisition of real property, construction and identified special needs” of the schools.

And what are “identified special needs”?

County Attorney Rheubin Taylor said that’s up to the commission, which controls how the money is spent. He also said school board members could identify special needs.

The committee discussed a process for requesting the PILOT money in which school officials would ask the chairman of the commission’s Education Committee for money, and the chairman would relay that request to the full commission.

But there still is no agreement among commissioners about whether PILOT requests would be made only by school officials. Some commissioners think those requests could come from fellow commissioners.

Commissioner Greg Beck has said money generated from PILOT agreements will be divided among the nine commissioners for projects of their choosing. He voted against the plan to withhold the money.

“I represent 35,000 people who are going to say, ‘Wait a minute. Where’s our share of the PILOT money?’” he said.

Commissioners Warren Mackey and Mitch McClure also have indicated that commissioners might have some say in how the money is spent. But Henry, Bankston and Commissioner Fred Skillern think the school board’s priorities should dictate the money’s use.

More: Schools, county pull together on funds

about Dan Whisenhunt...

Dan Whisenhunt covers Hamilton County government for the Times Free Press. A native of Mobile, Ala., Dan earned a degree in broadcast journalism from the University of Alabama. He won first place for best in-depth news coverage in the 2010 Alabama Press Association contest; the FOI-First Amendment Award in the 2007 Alabama Press Association contest; first place for best public service story in the Alabama AP Managing Editors contest in 2009 for economic coverage; and ...

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