Improvements to Loudon schools in limbo

County must now find way to fund projects after sales tax vote fails

By Hugh G. Willett, knoxnews.com

Voters in Loudon County earlier this week soundly rejected a half-cent sales tax increase, leaving the county commission few options except property tax increases to generate the more than $100 million requested by the school board for capital improvements.

Depending on who you ask, the rejection of the sales tax initiative by a 5,521-3,631 vote shows that residents either did not want to see an increase in sales taxes and wanted to pay higher property taxes instead or that voters were rejecting the idea of any tax increase for the schools.

"The voters have spoken," County Commissioner Don Miller said. "They didn't want to increase the sales tax, and they may not want to increase property taxes either."

Miller said the commission has been struggling with the task of generating the money requested by the board of education for capital improvements. It's a challenge that is almost out of the county's means, he said.

Early projections suggest property taxes might double over the next five years.

Generating the money requested by the board of education will require an increase in the property tax rate from $1.84 per $100 assessed value to $3.60 over the next five years, Miller said.

"I'm not sure that's something property owners will accept," he added.

Miller hopes the school board will come back to commission with more reasonable requests for the next five years.

The most recent funding proposal requests a 7 percent increase per year for the next five years, he said. "That's way more than inflation."

Some county activists have pointed to the rejection of the sales tax increase, not as a green light for a property tax increase but more as a warning sign of a possible taxpayer revolt.

"Even after being threatened with a huge property tax increase, the voters rejected the sales tax increase," said former County Commissioner Van Shaver.

"If the voters don't want a half-cent increase in sales tax you can bet the farm they don't want a 20- or 30-cent increase in their property taxes."

The rejection of the sales tax initiative puts the ball in the county commission's court, according to schools Superintendant Edward Headlee.

"It adds more weight to the commission's decisions," he said.

There is also a theory that many Loudon County voters did not believe that the increase in sales tax was going directly to the schools.

The sales tax initiative was the victim of bad publicity and rumors, Headlee said.

"I'm not surprised it didn't pass," he said. "There were a lot of signs posted around the county against it, and I don't think there was much positive said about it."

Rumors had circulated in the press, in discussions at school board meetings and on county activist Web sites suggesting that the wording of the sales tax initiative indicated the increased revenue generated would not really go to help the schools, but would allow the county to use the money for other purposes.

"Some people believed the money wouldn't have been used for the schools," Headlee said.

The board of education is working with the county commission to revise budget projections and the subject of funding options will be discussed at a school board retreat in Gatlinburg this weekend, Headlee said.

The school board is also looking to the state for additional funding. There has been discussion at the state level about using excess lottery funds for school capital improvements, he said.

State and federal funding increases are unlikely to make a big impact on the situation, commissioner Miller predicted.