Hamilton County will send 100% of revenue from certain tax agreements earmarked for education into a dedicated fund for school capital projects, a move school leaders are concerned could affect money available for day-to-day operations.
County commissioners approved the change during their meeting Wednesday morning. The vote was 7-3 with Commissioners David Sharpe, D-Red Bank; Steve Highlander, R-Ooltewah; and Chairman Chip Baker, R-Signal Mountain, voting against.
Commissioner Joe Graham, R-Lookout Valley, introduced the resolution earlier this month and also asked the county to create a savings account for capital needs, which the panel approved during its Oct. 19 meeting. The resolutions were part of an attempt to chip away at more than $1 billion in needed building repairs across the school system.
The funds involved come from payments in lieu of taxes and tax increment financing — two programs local governments use to lure businesses or help them expand with tax breaks or special tax zones where revenue generated by new developments can be collected for infrastructure projects. Money under such programs that flow to education budgets in general would instead go to school capital projects. The change would only affect newly created tax agreements or tax zones, not any existing ones.
Sharpe applauded Graham’s effort to create revenue for a historically underfunded part of the county and supported the creation of a dedicated account for facilities.
“But for the county to create an account for facilities and then ask Hamilton County Schools to fund that account out of their operational budget is kind of counterproductive,” Sharpe said. “We are in essence taking money from one pocket and placing it in the other.”
Sharpe also raised concerns about the effect it would have on future operating dollars available for salaries, including teachers.
Graham responded that the county wouldn’t be taking anything from teachers, and that it is just one way of funding the savings account commissioners created earlier this month, which would also pull revenue from other sources. That could include proceeds from building sales.
“This doesn’t take anything away from the school system,” he said. “This is money in the future that has not been even identified yet.”
He added that there’s no reason revenue from future incentive agreements couldn’t go in part to school operations.
“This is just setting the precedent to get something started so we’re not kicking the can down the road so we can say we’re trying every way possible to get our buildings repaired,” Graham said.
Hamilton County Schools’ revenue has grown from about $397 million in fiscal year 2014 to a budgeted total of $573 million in fiscal year 2023, according to a spreadsheet distributed to commissioners. There were 42,400 students in the system in FY2014 and 45,100 in FY2023.
Superintendent Justin Robertson told commissioners Wednesday that the most recent tax increase in Hamilton County that provided operational dollars for the school system was in 2006. Revenue since 2006 has been solely dependent on growth.
He suggested an amendment to the resolution that would evaluate future tax increment financing and payment-in-lieu-of-taxes or PILOT agreements on a case-by-case basis to decide what portion of the revenue for education would flow to operations versus capital needs.
“We know the cost of living is going up,” Robertson said. “We know the cost of supplies and goods are going up. People don’t realize the magnitude of the operation we’re running.”
The cost of diesel fuel, for example, has increased to $5 a gallon, Robertson said, and the system’s school buses run 23,000 miles a day.
Robertson added that the county needs to be realistic about its facilities problems. The new Tyner High/Middle Academy could bid out higher than officials had anticipated even a year ago, Robertson said, and the total value of deferred maintenance has likely grown from $1 billion to $1.3 billion at this point.
“We’re currently getting about $8 million a year in PILOT money,” Robertson said. “Even if you put that in a savings account for 10 years, that’s one building. That’s not going to get the job done.”
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249. Follow him on Twitter @flavid_doyd.