End of tax could hinder school projects

Excise levy, set to expire next year, will have generated $60 million for capital plans

April 16, 2006|By JOHN-JOHN WILLIAMS IV | JOHN-JOHN WILLIAMS IV,SUN REPORTER

Even as the Howard County Board of Education is working to raise enough money to support $99.975 million in capital projects, members are projecting a harder time looking for future funds when a dedicated tax source is expected to run out.

By the 2007-2008 school year, revenue will start to run dry from a short-term excise tax that has funneled more than $60 million into capital projects over three years.

That means the school system will be in the uncomfortable position of battling other county government departments for capital requests, leaving some to warn that crucial renovation projects at Worthington Elementary School and Clarksville Middle School could be delayed.

"The [school system's] requests will compete against roads, libraries, police requests," County Executive James N. Robey said, adding that the system used to compete against other government agencies before the excise tax. "There will be tighter competition for the dollars."

Joshua Kaufman, school board chairman, said that without a dedicated funding source, the system will be in the position of asking the new county executive to make "impossible choices for need."

School officials and politicians have disagreed about who is responsible.

Robey, whose term ends this year, said the school system has never had any solutions for raising money.

"They leave it to the government to come up with the capital for funding," Robey said.

Board member Courtney Watson said the board's hands are tied.

"It is really an issue for the state delegation and county government," Watson said.

A transfer tax proposed by Robey in 2002 would have produced an estimated $10 million a year in revenue, which would have been used to borrow up to $200 million and then pay off the debt - essentially freeing the board of additional lobbying for capital funds.

All three county senators - Edward J. Kasemeyer, a Democrat, and two Republicans, Robert H. Kittleman and Sandra B. Schrader - signed a statement in February 2003 that they were against the transfer tax. In January 2004, the transfer tax was defeated again during a straw vote.

In March 2004, the excise tax, which was considered a compromise, was approved. Dels. Warren E. Miller and Gail H. Bates opposed the excise tax.

The three-year excise tax generated money from a $1-per-square- foot surcharge on new homes. The revenue would allow the county to borrow about $60 million and then pay off the bonds over two decades.

The excise tax generated $41.8 million for fiscal 2005 and $14 million for fiscal 2006, according to Jim Vannoy, Robey's deputy chief administrative officer. Vannoy said the system would receive a final payment of $5 million for fiscal 2007.

Kaufman said the board has not discussed a funding solution with state delegates.

"It may be something that we will have to take up in the future as we have to cut back our capital requests," Kaufman said.

Del. Elizabeth Bobo, a Howard County Democrat, said the recent crunch was foreseeable.

"I proposed an excise tax as far back as 10 years ago," said Bobo, who said the excise tax projections are off and that the county probably will have more than $5 million to spend next year.

Bobo, who opposed Robey's transfer tax in 2004, said she did so because the tax would have affected senior citizens.

"They are on a fixed income," Bobo explained. "To place [a tax] on existing homes was not a fair way to fund the construction."

Although Bobo did not offer an immediate solution to the problem, she agreed that all facets of government were needed to find an answer.

"It takes the county government, planning and zoning and the state," Bobo said.

Meanwhile, the school system has been left scrambling to find money to fund several construction projects.

Recently, the system learned that Robey intended to provide $80 million for school construction, compared with the nearly $100 million that the school board requested. Robey said that a General Assembly conference committee recommended giving another $5 million to the county.

"As the experts tell us, the longer you defer maintenance, the more expensive it becomes to fix it," Watson said.

"We have to have some responsible policies in place when we allow growth to occur," Watson said. "It's a problem that the next county executive needs to handle."

The school system absorbs about 500 to 700 new students a year and has opened 26 schools since 1990, Watson said.

An average of 1,685 homes per year have been built in the county since 2000, and of the 1,650 units built last year, 484 were homes for senior adults, according to the county's 14th Development Monitoring System Report.

A majority of capital funds have been used to address growth, something that has taken away from maintaining existing schools, Watson said.

"We have these needs because of the amount of growth," Watson said. "The frustration on our part is, if you want to continue growth in the county, you need to pay for construction caused by growth."

john-john.williams@baltsun.com

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