By COLLIN BROOKS
Washington County Mayor Dan Eldridge made a rare appearance in front of the Johnson City Board of Education on Monday, September 5 to address what he thought was going to be a series of updates on the capital projects that the county school system is planning.
Instead, it turned into— at times — a heated discussion between some school board members and the Washington County mayor about the $0.40 cent property tax increase recently imposed by the county, $0.32 of which will be placed in a capital funds project for county use.
Johnson City Superintendent Dr. Richard Bales summoned Eldridge, along with Washington County Finance Director Mitch Meredith, Johnson City Mayor Clayton Stout and Johnson City City Manager Pete Peterson to discuss the tax increase with the school board, however it was Eldridge that bore the brunt of the questioning during the almost one hour exchange.
“There is a concern about the implications of the approach that the county is planning to take with that $0.32 cents from the recent tax increase that they are going to be putting into their capital projects account,” explained Johnson City Board of Education Chairman Dr. Tim Belisle to the Herald and Tribune a couple of weeks after the exchange.
Belisle said that those concerns boil down to the fact that the county residents will be reaping the majority of the rewards of the property tax increase, even though just over 64 percent of the property tax collected comes from properties within the city limits.
“What was surprising to me was the obvious animosity held by certain members of the Johnson City Board of Education toward the Washington County School System.”
— Washington County Mayor
Also, if that account begins to accrue money, it could quickly rise to the point where the county won’t need to borrow money for capital school projects, which would mean that they would not be required to share the same amount of capital with the city system.
“The mayor made it clear that the city schools would not be eligible, to pull funds from that capital projects account,” Belisle said.
However, Eldridge said that paying cash for projects — which isn’t an option right now, as the capital funds project will only accrue close to $9 million per year; the first two projects of the proposed “Washington Way” will cost the county more than $50 million, the balance of which they plan to borrow — will save taxpayers money in the long run because they will not have to borrow double the amount of money and pay interest on the borrowed amount in order to give the Johnson City system their equitable share.
But Johnson City BOE members still seemed to take offense to the future plans of the county as Dr. Richard Manahan said that the T.C.A 49-3-315 that Eldridge is relying on is a loophole.
“It’s so inequitable, his approach on how he is trying to solve this problem in the county,” Manahan said. “This public chapter that he keeps talking about is a provision by the county to avoid sharing tax revenues with a municipality and that’s wrong, it’s just wrong.
“He has basically found a loophole to be able to do that, but as a mayor of Washington County, he is not taking into account the Johnson City citizens and what the needs are there for their educational component,” Mahanan continued. “And that is my concern and that is how it has always been handled, it’s always been fair and equitable.”
Eldridge adamantly defended the law and said that recent court cases have upheld his understanding of the state code.
“It’s not a loophole, it’s not a loophole at all,” Eldridge told the Herald and Tribune. “As a matter of fact, the city of Athens recently sued McMinn County over this and it went all the way to the state Supreme Court and they found in McMinn County’s favor.
“The law in the State of Tennessee when it comes to capital projects requires that you share borrowed dollars only. That is what the law says; it’s plain as can be. There is no loophole to it.”
Eldridge said that taxpayers will reap the benefit because every dollar that they pay in cash is a dollar of savings to the taxpayer.
“It’s not that we don’t want Johnson City to have anything, it’s not that at all. The issue here is (that) my responsibility and the responsibility of this county commission is first and foremost to the taxpayers of this county,” Eldridge said. “The law allows us to reduce the burden on all tax payers — city or county — by paying cash, rather than borrowing.”
The county has yet to borrow any funds earmarked for Washington Way projects and Eldridge said that they are probably still at least a year away from needing to borrow any money.
Eldridge pointed out that he felt the state’s Basis Education Program funding model, which was created in 1992, is outdated. It only takes into account the 95 counties in the school system, not the 136 school systems, which creates funding disparities between the counties with county and city systems.
He said that using the state’s fiscal capacity, rather than the system-level capacity overstates the county’s ability to pay and understates Johnson City’s ability to pay, which results in more state BEP funding to Johnson City and less to Washington County.
Another related issue that Eldridge pointed out is that the city gets the lion’s share of the sales tax revenue (Johnson City receives 75 percent while Washington County receives close to 25 percent), so they have the funding advantage. He said that Johnson City receives $5 million per year in state sales tax that the county does not.
But at the meeting it seemed city BOE members believe this will give the county a heft advantage by collecting the new $0.40 property tax ($0.32 or close to $9 million dollars per year) and keeping it for themselves.
Eldridge said that he believes that there is something more at play than just a funding between the city and county.
“What was surprising to me was the obvious animosity held by certain members of the Johnson City Board of Education toward the Washington County School System,” Eldridge said. “That was clearly revealed by one of them stating his opposition to the Washington Way and his concern that the best and brightest from the Johnson City would be lured to Washington County, negatively impacting the city’s achievement numbers.”