City and county officials still at odds over county school funding strategy

Johnson City City Manager Pete Peterson addressed the Washington County budget committee during their meeting last Thursday. Photo by Collin Brooks

Johnson City City Manager Pete Peterson addressed the Washington County budget committee during their meeting last Thursday. Photo by Collin Brooks

By Collin Brooks

The good news for members of the Johnson City Board of Education and Johnson City officials is that they finally know how, currently, Washington County plans on funding their school capital projects.

The bad news, albeit not unknown, is that Johnson City leaders aren’t going to get all the shared bonds they anticipated.

During last Thursday’s Washington County Budget meeting, Washington County officials publicly talked about their funding strategy with numerous Johnson City representatives, including Johnson City City Manager Pete Peterson and Johnson City Board of Education Chairman Tim Belisle.

Other members of the bodies were also on hand, filling the room to a rare capacity crowd.

During the presentation, Washington County Mayor Dan Eldridge and Washington County Director of Finance and Administration Mitch Meredith showed that the county will share about $24.5 million with the city. The last document presented by the county had the city system receiving just under $30 million.

The county announced they will be spending $101 million total on the new school projects, with $30 million of that coming from cash.

After fielding questions from city representatives, including Peterson, Belisle and school board members Jonathan Kinnick, Kathy Hall and John Hunter, Eldridge said this was the only way that the county could address their school system facilities needs.

“Believe me, everyone is giving in this deal,” Eldridge said. “But they are giving because the county commission can’t take on $200 million worth of debt. That $110 million (worth of) projects they came to us with, would have required $214 million worth of new debt, on top of the $150 million worth of debt we already have,” Eldridge said.

He said that would have never happened and as a result the Washington County School System has taken a lot of their needs and set them aside.

“I understand that you guys aren’t happy with it, I don’t think the Washington County Board of Education is happy with it,” Eldridge said. “I don’t think the county commission was happy to raise taxes 40 cents. I don’t think anyone is happy about this, we’re just trying to manage to a point we can all live with.”

He said that while this may not be the perfect scenario, the county commission’s main responsibility was making sure that county taxpayers didn’t have too much of a burden placed on their back.

Hunter said that the city wasn’t complaining about the 14 cents of the 40 cents that is being used by the Washington County government for capital projects. But the rub comes in at the educational piece, where the county will use 26 cents for county schools and the city won’t receive any benefit.

Some city representatives have called for a rural property tax increase, but Eldridge said something like that would be illegal.

“State law says that the county commission will access a county-wide property tax for the maintenance and operations of a county school system,” Eldridge said.

But he admitted that he wished that the county could only be responsible for funding their schools and the city was responsible for funding their schools, but that also isn’t within the law.

Other city concerns come five years down the road, when the county may have the potential to accumulate the 40-cent property tax rate at the tune of over $11 million a year.

Another rub for the city is that the property tax numbers used by Eldridge in his Mayor’s Report are “skewed” by him not including commercial property tax revenue. That didn’t seem to sit well with Peterson.

“I didn’t come here to argue with you,” he said to Eldridge. “But I would ask you to do one thing. All taxpayers in the city of Johnson City need to be included, not just the residential taxpayers, because everybody knows that the commercial activity happens in Johnson City because of all the additional improvements that are made within the corporate boundaries.”

He referred to the improvements made to water, sewer, police, fire safety and schools.

“And that commercial taxpayers are just as important to you as they are to us,” he said. “So I think everybody ‘ought to recognize the commercial taxpayer and the amount of money they pay into this formula. Because just using residential numbers really skews the numbers, Dan.”

Eldridge said they don’t use the commercial numbers because businesses are there because they gain value from all the residents, whether they live in Johnson City or rural Washington County.

“The businesses wouldn’t be there if their sole source of economic value was derived from Johnson City residents,” Eldridge said. “So you really have to carve that out and look at the residential property taxpayers, people who have kids in school and people who are creating and doing the consuming for these businesses. You have to look at them as a unique set of taxpayers in regard to comparing rural Washington County versus the city of Johnson City.”

The mayor said that if rural Washington County taxpayers and consumers weren’t there, the businesses wouldn’t be in Johnson City.

“They’re only in Johnson City, quite frankly, because Johnson City is the economic hub of activity,” Eldridge said, while noting that he thought rural Washington County taxpayers probably contribute more to the economic value created for the businesses than the city taxpayers. Eldridge said that county household incomes are about 25 percent higher than those in the city.

Eldridge went on to say that it wasn’t the county commission’s responsibility to adjust their tax rate based on the tax rate of their neighbors.

“It is not the county commission’s responsibility to minimize the city commission’s responsibility to manage their tax rate,” Eldridge said, “and I think that some of this argument has kind of given me the impression that the county commission is expected to manage it’s business in a way that minimizes the city commission’s responsibility to fund.

“And maybe that is my perception, but some of these arguments that I’ve heard, that is what it sounds like.”

Belisle said that he was unhappy with the fact that Washington County has essentially reduced the city’s school system ability to borrow also.

“You have effectively reduced our ability to borrow to fund our capital needs in the city by about, arguably, $3.5 million a year,” Belisle said. “Which would be debt service on a pretty significant amount of capital. So our ability to issue debt, our ability to do debt service has been reduced by that amount and that money is coming to the county to fund the county schools exclusively.”

But the city BOE chairman did thank the county delegation for taking the time to field questions from the city members and he also wanted to take time to set the record straight, dispelling any notion that the Johnson City BOE had anything but respect for the Washington County system.

“I’ve heard it said that the Johnson City schools or Johnson City in general is trying to hurt the Washington County county schools and I want to make it very clear that there is nothing further from our board’s standpoint. Our board supports public education across the state and wherever public education can be bettered, we are in favor of it.

“So we are friends with our folks down in the county with our county school board and we want them to have everything they can get in order to achieve and improve their system, just like we are trying to continue to improve ours.”

The capital improvements will be able to start rolling for the Johnson City School System as they were informed that the county planned on borrowing enough to get the city $8 million worth of bonds at the end of June.

That could help construct a new lunch room and gym at Liberty Bell Middle School, where they are trying to get the kids completely out of Freedom Hall. The city will also receive close to $24 million in shared bonds over the next five years.


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