MCSD board approves borrowing up to $50 million

The Muscogee County School Board during Monday night’s meeting approved superintendent David Lewis’ recommendation to borrow as much as $50 million in response to the Columbus Consolidated Government’s delayed property tax billing.

The vote was 6-1. Laurie McRae of District 5 cast the nine-member board’s lone opposing vote; Frank Myers of District 8 was absent.

The Muscogee County School District’s fiscal year 2018 budget was projected to include $115,185,228 in local revenue out of $270,519,736 in total revenue and $288,819,039 in total expenditures and transfers when the board adopted it in June. But that was before the situation simmered then boiled over this summer, when the public realized a perfect storm of a citywide property reassessment and a new software system in the Muscogee County Tax Commissioner and Tax Assessor’s office combined to produce shocking tax bills, increasing as much as tenfold.

So in a called meeting last week, the board voted to cut taxes for the first time in 21 years. It rolled back the millage rate from 23.37 to 23.321, resulting in a decrease of $250,204 in the local revenue the Muscogee County School District could receive. But because of the citywide property revaluations, the decreased millage rate still is projected to increase MCSD’s local revenue by approximately $4.9 million.

The rollback of the millage rate translates to a savings of $1.79 on the property tax bill for the owner of a parcel with a homestead exemption and a fair market value of $125,000. The for non-homestead property with a fair market value of $175,000 will be $3.43.

Meanwhile, the number of tax appeals filed by Muscogee County property owners has hit an all-time high with 10,642 processed as of Sept. 12. Of that amount, 5,145 have been reviewed by Muscogee County Tax Assessors, and 3,209 have been recommended for reductions. Another 1,469 were recommended for no change, 33 for administrative review, and 434 for additional review by a division manager. The number of cases recommended for reductions represents 62 percent of those reviewed.

Normally, property owners make tax payments in October and December. But this year, October payments were eliminated because the revaluation project delayed the mailing of tax notices, pushing back the dates when the city and school district are expected to receive revenue. The school district receives 60 percent of the digest and the city 40 percent.

“The delay in approval of the calendar year 2017 property tax digest and subsequent delayed property tax billing have adversely impacted the district’s cash flows,” the MCSD administration says on the agenda. “Historically, the property tax digest is submitted to the State Revenue Commissioner for approval in August with billing taking place shortly thereafter.

“... This delay has required that the district secure short-term borrowing in the form of a Tax Anticipation Note (TAN) to provide the cash flow to meet operational needs while awaiting receipt of property tax proceeds. TANs are secured by the taxes levied for the respective calendar year and must be repaid in full by December 31st of the year that the note is issued.”

The TAN will be issued to “the financial institution submitting the lowest qualified interest rate bid,” according to the agenda. “Interest rate bids will be solicited, received and evaluated by staff and representatives from Davenport and Company (of Greensboro, N.C.), the district’s Independent Financial Consultant, prior to the September 18, 2017 Board Meeting. The TAN will be repaid from local property tax receipts. The funds will be drawn as needed with an initial draw of $25 million and the ability to draw an additional $25 million at a fixed rate before final maturity.”

The MCSD administration estimates the interest expense will be $85,250 if $25 million is drawn or $170,500 if $50 million is drawn.

District 2 representative John Thomas asked for an update on last month’s resolution requesting CCG to reduce the 2.5 percent fee it charges MCSD for collecting property taxes by the dollar amount it will cost MCSD to borrow the money. Board chairwoman Pat Hugley Green of District 1 said CCG hasn’t responded.

Countywide representative and vice chairwoman Kia Chambers noted the resolution contained an unspecified amount and asked whether the projected borrowing cost could now be communicated to CCG or amend the resolution. Board attorney Greg Ellington said, “We can just tell them.”

McRae didn’t explain during the meeting why she voted against the loan, but in an email to the Ledger-Enquirer she said, “I voted against it because, based on the cash flows I had been given, it looked like we would not need the additional money until November or possibly December nor, in my opinion, did it look like we would need the full $25 million. The TAN they approved locked us into borrowing $25 million starting the end of September and paying interest on it through the end of December.”

This story was originally published September 18, 2017 at 8:04 PM with the headline "MCSD board approves borrowing up to $50 million."