Citizens tasked with the decision to approve or deny a $160 million school bond in November face a spectrum of possible increases to New Hanover County’s property tax rate, with estimates ranging from 2 to 9 cents by July 2015.
County officials have predicted a 4 cent raise for the 2015-16 fiscal year if the bond passes, in addition to a 5 cent hike suggested by county manager Chris Coudriet to accommodate existing debt.
But Bruce Shell, Republican candidate for the New Hanover County Board of Education and Coudriet’s predecessor, stated a 2 cent increase could pay for debt issued through the school bond plus existing county debt. Shell served as the county internal auditor for six years, county finance director for more than 11 years, and county manager for more than five years.
Shell used the county debt schedule to calculate the bond’s impact. He said the difference between his estimate and county estimates is based on the dynamic between existing and pending debt. Because existing debt obligations will decrease in the next six years as new debt accumulates, even if revenue from property tax and sales tax does not grow as predicted, a 2 cent raise by July 2015 would cover the cost of the bond.
Under the county’s estimate, the impact of the bond to the county tax rate is only 3 cents on average, with tax increases tapering off throughout the bond’s 20-year life.
To ensure voters have access to information needed before casting votes, Shell reached out to county leaders, including county commissioners and candidates running for two open seats on the board, to explain his analysis.
“When the voters answer the question on the bond referendum, they’re basically saying that we approve of this, to sell up to that amount of debt,” Shell said during a Sept. 23 phone interview. “So wouldn’t you think the voters ought to know the cost if they’re pledging the taxing authority of the county?”
Woody White, county commission chairman, said he does not support the bond under either estimate.
“The bottom line is, under either Bruce’s analysis or county staff’s analysis, this new bond will result in an increase to our property tax, and I’m opposed to that. Period,” White said during a Sept. 29 phone interview.
White said his objections to the bond are not based on school needs, but what he calls an unsustainable trend of funding improvements by incurring debt. He suggested the county look at alternate sources of funding for school improvements, like redistributing a portion of the sales tax.
Republican candidate Dr. Derrick Hickey, who saw Shell’s calculations and said they make sense, said he understands from his tenure on the county school board how deferred maintenance can ultimately cost taxpayers more money. While he supports the bond, he also said he would consider sales tax redistribution or other options.
Hickey proposed a public work session, like ones organized by the school board, could allow for more understanding of different perspectives on the bond.
Vice-chair Beth Dawson said different numbers arise from unknown variables that will drive the cost of the bond, like when debt is issued and how county tax revenues grow. She encouraged citizens to make a decision based on the needs of the bond, rather than how the bond will affect existing debt.
“You’ve heard 2 cents, 3 cents, 4 cents. Well, for the purposes of passing this bond and educating the citizens about the importance of this particular bond issue, it does not need to be lumped in with other county debt,” Dawson said during a Sept. 30 phone interview “I think the first thing voters need to recognize is what we need in this community to have the very best educational system.”
Democratic candidate Rob Zapple said he spent weeks trying to understand the different tax scenarios, and after meeting with both Shell and county staff, he also attributes varying estimates to different approaches to debt management.
All county schools will undergo security, technology and infrastructure improvements if the bond is approved.
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