Fort Mill Schools plans tax rate hike that could impact multiple businesses
Business owners within the Fort Mill School District would see higher tax rates under a budget proposed Tuesday night. So would apartment, vacation home, vehicle and boat owners.
A $253 million general fund budget would come with the highest tax rate increase allowed by law. A 21.2-mil increase would bring the rate to 308.6 mils — that’s a 7.4% increase. Millage is the rate applied to the assessed value of property.
For business or personal property taxed at the standard 6% assessment rate, the current tax is $1,724.40 for every $100,000 in value. The planned hike would be an extra $127.20 per year for every $100,000 in value. So a $1 million business would pay $1,272 more. A $10,000 car or boat would cost an extra $12.72.
The increases don’t apply to owner-occupied homes.
The budget for the fiscal year starting July 1 isn’t finalized and still could change based on state education funding from the legislature. The increase would follow other big decisions to fund Fort Mill schools, some of them billed as a way to avoid tax increases.
Last year, voters in the Fort Mill district approved a $204 million bond referendum for a middle school, child development center, land and other upgrades. Last week, York County upped the school impact fee for the district from about $18,000 to nearly $30,000 per new home.
Impact fees are a way to avoid tax increases, district officials said while making their case for the higher new homefees.
Builders pay impact fees before construction new homes and apartments. The county sends that money to the school district, where it’s used to pay capital costs.
Here’s why the district is now looking toward a tax rate increase:
State school funding revenue model impacts
Three years ago, the state adopted a new education funding model that district leaders say doesn’t account for high-growth or low-poverty districts.
“I’m concerned that we’re not seeing any significant changes,” said Leanne Lordo, district associate superintendent and CFO.
The district budget relies heavily on state allocations. The state budget process will run into May. The school district will then refine its recommendation in time for a June public hearing on the budget.
The district’s budget proposal shows $104.8 million from the state, up $4.6 million from this year. State revenue makes up more than 40% of the district’s general fund.
Among Lordo’s concerns is a $111 million source of new revenue for state education where more than $50 million goes to state-sponsored charter schools. State funding that doesn’t keep up with growing districts like Fort Mill’s puts boards in the “unfortunate position” to have to consider tax increases, she said.
In talking with counterparts across the state, Lordo believes the issue is larger than just Fort Mill. “We all feel like there is something wrong with the calculations on this formula,” she said.
Fort Mill teacher pay increases to stay competitive
Gov. Henry McMaster presented a budget plan in January to increase starting teacher pay statewide to $50,000. That’s a $3,000 increase, and districts can pay more than that amount. In Fort Mill, starting pay already is $50,000.
The state House budget plan passed last month, though, only would fund half of McMaster’s requested starting pay increase. With the state only covering a $1,500 increase, Fort Mill would still increase its baseline pay by $2,500 to $52,500.
The increase is needed, Lordo said, to remain competitive.
“We are behind some of our surrounding districts (in starting teacher pay),” she said. “I don’t think we can catch up there next year.”
Fort Mill teachers would get a 5% pay increase and other staffers would get 4% in the latest proposal. The district budgets for 27 new teachers, assistants or instructional coaches.
About 90% of all general fund spending in the Fort Mill district goes to salaries and benefits.
Teacher pay is determined by the highest degree a teacher holds and length of service. The district has more than 700 teachers at Masters or higher-level degrees, Lordo said. She budgets new teacher positions on a mid-level degree and seniority. With pay and benefits, that cost is more than $95,000.
Costs for new teachers and pay increases in the proposed district budget come to about $8.1 million. The projected state allotment to cover them is about $3.7 million.
“We decided to put as much new revenue into current pay for our teachers and our staff before we looked at adding anything else,” Lordo said.
Impact fees can’t pay for school operations
Impact fees are charges on new construction. Revenue from them can be used to buy land or build schools. It can’t pay teachers. It can’t cover utilities.
“We cannot use impact fees for any operational costs,” Lordo said.
The same is true for school bond revenue. Board members acknowledge it could be confusing for people to hear that impact fees would prevent higher taxes, then see increased tax rates.
The proposed tax rate increase is about the same amount the district would’ve had to go up already if not for the roughly $70 million of impact fees collected since 2018, said board Chairwoman Kristy Spears. That increase would’ve come through higher bonds, which impact homes along with businesses.
“It’s a significant savings to our taxpayers,” Lordo said of impact fees.
This fall, the district will open Flint Hill Elementary School. Construction was paid for it through impact fees. Yet it’ll cost $3.4 million and require 35 hires to open the school. That’s with no new classroom teachers, since the district will use existing staff at the new school.
Tax increase compared to no change for Fort Mill schools
The tax increase is expected to generate $7.6 million. About 60% of the increase is related to district growth, and the rest for inflation cost increases.
Without the increase, tax revenue would still be expected to increase $5.1 million. That’s due to a 2% growth rate and a mil, the unit for determining tax rates, going up in value from $350,000 to $360,000.
Local revenue, almost entirely from taxes, would be $145.2 million in the projected budget. That’s an increase of $13.4 million from this year. Local revenue accounts for nearly 59% of the district’s annual general fund budget.
Projections are based on 18,618 enrolled students, up 188 from this year.
