The district collects about $32 million each year in Special Purpose Local Option Sales Tax revenue, and uses a portion of it to pay $9.8 million in debt service annually.
The county Board of Commissioners on Tuesday night approved a state-mandated resolution that if the school SPLOST isn't renewed by voters next year, school property taxes will be raised to pay the debts.
The school SPLOST revenues are funneled into a reserves account to make sure the debt service, which is split into two payments a year, is paid, said Candler Howell, the district's assistant superintendent for financial management.
"It is required by law that bond payments are made first from SPLOST proceeds before they can be used for capital outlay projects," Howell said.
While the district has been able to make its SPLOST debt payments each year, declining sales tax revenues are impacting construction projects.
Collections are 24 percent below estimates and could result in a $51.2 million projection shortfall by the time the 60-month collection period ends in 2012.
The loss has already forced the district to cut from its current five-year facilities construction plan two new elementary schools and two new parent entrances at Boston Elementary and Carmel Elementary schools.
The district uses SPLOST funds for construction of new and replacement facilities and for the purchase of technology upgrades. The revenues can't be used for day-to-day operating costs such as salaries.
County Superintendent of Schools Dr. Frank Petruzielo said the district most likely will ask voters next November to approve the SPLOST renewal.
If voters don't approve the SPLOST renewal referendum, the school board would likely need to increase the millage rate to cover current and future debt.
Petruzielo said it could take a tax increase of 2 mills to cover the loss of SPLOST revenues. For a $200,000 house with a standard exemption, that's a $150 increase.
The county Board of Commissioners' resolution called for a rate increase that would cover payments of principal and interest for refunding $3.5 million bonds and $40 million in construction bonds. The latter are tied to state Qualified School Construction Bonds being used for the replacement E.T. Booth Middle School.
The resolution calls for the tax increase only if voters don't approve the SPLOST.
The resolution is required by state law to "ensure repayment of bonded indebtedness by the school districts," County Attorney Angela Davis said.
The county government's SPLOST renewal referendum on this month's general election ballot passed, but with a slim margin of 52 percent or 32,521 votes.
Petruzielo said he doubts residents would vote down the school SPLOST, as they understand their property taxes would rise if it's rejected.
"That would be a very substantial increase in the millage rate, which I'm sure people would not be in favor of," he added.
It is time that the school system do like the fine citizens of Cherokee for which it serves. They need to learn how do do the same or more with less. We need to say "NO" to any ESPLOST and bring this matter to a head. Other than overpaid $90 thousand administrative workers or overpaid teachers with tenure, it won't affect the students.
Perhaps the BOE and the BOC should suspend their construction programs until the employment rate is reasonable and economy is back on track.
I don't think the taxpayers of Cherokee County will respond to threats by the BOC/BOE in a positive manner. I know it will make my family vote no to all new taxes measures.