Richland School District Two seeks more taxes from businesses to fund budget shortfall
More taxes from Richland County businesses will be needed to cover a funding gap in Richland School District Two’s budget for next year.
School board members unanimously approved a budget for 2015-16 that totals $246.3 million and includes a millage rate increase of 13.5 mills.
District Two’s Chief Financial Officer Harry Miley said the rise in the property tax rate is necessary to cover more than $12.3 million in district needs and $11.3 million in additional budget requests.
“There is no other way to fund the needs of the district without this millage increase,” he said.
Richland Two’s student population has grown from more than 17,000 to nearly 27,000 students since the year 2000. The district also added 14 schools in the past five years. But Miley said property tax values have diminished in the past two fiscal years despite an average 5.8 percent growth in the district’s fund.
“That cost us a lot,” he said.
Miley said personnel cuts would loom if the district submitted a budget recommended by the Richland County Council that funded only state-mandated expenditures. He suggested board members only submit the staff-approved budget.
“We would have to fire people in order to fund just the state mandates with no new dollars — we would have to lay people off,” he said.
Districts around the state are reeling from revenue losses in their budgets after state lawmakers passed legislation in 2006 to exempt homeowners from paying property taxes to fund schools. The bill added a 1 percent sales tax to recover lost funds, but that did not cover the funding gap. Miley said the district would generate $26 million if homes in the county were taxed.
“Act 388 isn’t keeping us whole and is causing us shortfalls before we have to make that up in millage,” he said.
Richland Two will seek to max out the state-approved 10.0 mills to cover the budget in addition to an extra 3.5 mills that comes from a provision in Act 388 that allows districts to capture unused mills from three years prior to be added to the current budget year.
The budget covers increases in state employee health insurance and state retirement allocations and more than $4.1 million in staff grade salary increases. The budget also funds 20 additional national board certified teachers and 20 full-time equivalents.
A line item for $73,090 to fund a teacher for a world language pilot program was removed to fund two hall monitors for the district’s middle schools at board member Monica Elkins-Johnson’s request.
“I think safety is our No. 1 priority,” she said.
Miley said it would take business growth in the county to continue to support the budget and offset the losses from lower property taxes. He said Tuesday night that he hadn’t heard of any complaints from business owners.
“I have not heard anyone stand up and say, ‘you’re taxing me too high,’ ” he said. “None of us like to pay taxes, but again I would say this is a necessary piece in order to really meet the needs of the district.”
Business representatives in the county beg to differ.
“If you look at what’s been happening over last five years, you’ve seen a significant increase in the millage rate,” said Carl Blackstone, president and CEO of the Greater Columbia Chamber of Commerce. “So I don’t know any business that would be fine with that.”
Blackstone said businesses in the organization have demanded a solution to curtail the millage rate increases for Richland One and Richland Two school districts.
He said the disproportionate share of taxes being paid out by businesses is hindering the county from attracting new industries like manufacturing. Blackstone said Richland Two’s millage rate is higher than the overall rate for some counties in the state.
“We have the highest cost of doing business in the state,” he said. “We can’t attract new business with such high millage rates.”
Most of the new business announcements made by the state’s commerce department have come from the Upstate and southern regions of South Carolina.
Officials with consumer tissue paper manufacturer Orchids Paper Products Co. said earlier this year that they would establish operations in Barnwell County, investing at least $110 million and creating 134 new jobs.
Florida-based bottled water manufacturing firm Silver Springs Bottled Water Co. acquired Hickory Springs Bottling Inc. in Calhoun County, and company leaders are planning to expand operations. Silver Springs will invest $16.3 million investment, a venture that is expected to generate 37 new jobs over the next five years.
And the Ashley Furniture Homestore licensee Broad River Furniture will open a $12.6 million corporate campus and distribution center in York County. The 174,000-square-foot facility is expected to bring 200 jobs to Fort Mill when it opens in November.
These economic losses, Blackstone said, can be attributed to the high tax rate in Richland County.
“We’re out of the game before we know it’s even being played,” he said.
Blackstone said the Columbia Chamber and its partners are not in a fight against the school districts but said both sides need to sit down and find solutions to reduce the tax burden on businesses.
“This is not us against them ,” Blackstone said. “We’ve got find a way to broaden our tax base. We’ve got to work together.”
It also will require growth in the private sector to fill in gaps that are not occupied by entities that use services but are exempt from taxes like churches, federal and state government buildings and the universities, according to Blackstone.
County Council will review the district’s budget at an upcoming council meeting.