O’Malley: Build trust with taxpayers
FLORENCE, S.C. – Florence One Schools will be asking the public to approve $198 million in bonds to build four new schools, renovate the three high schools and build an athletic facility for each high school.
If the public approves the proposal on Feb. 26, the school district will issue 25-year bonds to complete the proposed projects.
Compass Municipal Advisors calculated how much the bonds would raise property taxes using a 5 percent interest rate. Using the calculated 5 percent model, the bonds will cost $135 million in interest, costing $333 million overall for the bonds.
Mike Gallagher, director of Compass Municipal Advisors, said using the 5 percent model is a very conservative way of calculating the tax increases. Currently, the interest rates are around 4 percent, but to be safe, they calculated the increases at 5 percent to account for potential market changes.
With their calculations, the maximum increase in millage rates for residents of the school district would be from 32 mills to 65 mills, Gallagher said.
For a personal home, or owner-occupied property, costing $150,000, people would see a $201 annual tax increase. Those with a home costing $200,000 would see a $268 annual tax increase.
The tax on cars valued at $10,000 would increase by $20.10 a year. The tax on a car valued at $20,000 would increase by $40.20 a year.
Florence One Schools Superintendent Richard O’Malley said the district can delay the tax increase until 2021 because of the different phases of construction.
For the beginning stages of construction, the school district will be able to use some of the district’s surplus money to help begin projects prior to purchasing bonds, O’Malley said.
O’Malley said he wants to allow residents of the school district to begin to see the new constructions before they begin paying for it.
“We need to build trust with the taxpayer, and the best way to build trust is for them to see things going up, buildings being built and constructions starting on all the projects before they started paying for it, which is usually the opposite,” O’Malley said. “What’s happened in the past is they start paying before things go up.”
Officials say other options for building schools are not available or won’t work as well.
Other options that Florence One Schools has tried or cannot use to build new schools consist of the penny sales tax or the pay-as-you-go plan.
Under a law called the Education Capital Improvement Sales Tax and Use Act, the district is not able to use a penny sales tax to build new schools. Florence One does not meet any of the exceptions under this code to impose a sales tax.
According to O’Malley, under a 2013 South Carolina Supreme Court Decision, not one of the 85 school districts has used special legislation to get an exception to the act, making it highly unlikely that option would succeed for Florence One.
In the past, the district has used the pay-as-you-go model, which used short-term bonds that yield about $11 million a year. These short-term bonds are called “8 percent money,” because the bonds are issued against 8 percent of the value of taxable property in the district.
Florence One Schools used this model over the past six years, building five new schools, including Delmae Elementary, Royall Elementary and North Vista Elementary.
The district has been borrowing money to build schools as it was building under the pay-as-you-go plan, as well as spending some of the operational budget to pay for the new schools, O’Malley said. This took away from money that could have been spent on building maintenance, technology and other things, he said.