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July 3, 2014 11:43:41 AM
A battle is brewing over how Starkville should use almost $500,000 in over-collected school district taxes after Vice Mayor Roy A. Perkins opined that the city should take legal avenues to keep the money for itself during Tuesday's board of aldermen meeting.
A state legal opinion appears to give Starkville the ability to transfer 1986's over-collected, Starkville School District improvements bond balance to the city's general fund and offset next fiscal year's taxes by the same amount.
Starkville Mayor Parker Wiseman, however, asked for further legal clarity on whether the city can issue the funds to SSD since the 1986 bond referendum raised money for school improvements, not general city expenditures.
Further complicating the matter, Wiseman said, is the fact that SSD's service and taxing territory is comprised of the entire city and a small area outside its limits, meaning some county residents would not experience tax relief if the city claims the money and adjusts its own taxes.
The general obligation bonds were issued after a referendum on SSD improvements and retired 20 years later, but a surplus fund of $474,081 was discovered this spring by the city clerk's office.
Due to changing statutes and tax-collecting and -paying authorities in the '80s, it is believed the over-collection occurred because the original millage rate was not adjusted properly after multiple property value reassessments. Compounding interest helped balloon the amount to the figure discovered this year.
While SSD is partnering with Oktibbeha County School District and Mississippi State University to identify funding streams for improvements and construction projects officials deem necessary to facilitate 2015's countywide school consolidation, Perkins challenged the school system's legal standing to accept the funds Tuesday, saying the check was wrongfully issued without board authority.
Perkins said he was open to legal avenues that would satisfy the city's request.
Tuesday, city officials confirmed the check itself was voided, and the balance was still in a city account separate from the general fund.
Starkville board attorney Chris Latimer began a process seeking legal answers to the vice mayor's request prior to Perkins' comments Tuesday. An opinion issued by the Mississippi Attorney General's Office to Latimer in June states the surplus funds may be transferred to the city's general fund in accordance with Miss. Code Ann. 1982 27-105-367.
A subsection of that statute states the money could be used in the succeeding fiscal year's general fund "if the purpose for which the special fund was created has been fully carried out." Taxes for the succeeding fiscal year must also be reduced by the amount of such a transfer.
Starkville could experience a tax increase due to a number of potential maneuvers, including a call by the Golden Triangle Development LINK to issue $5 million in economic development bonds for a new industrial park near the Highway 182 and Highway 25 bypass.
Last year, aldermen increased taxes from 20 mills to 21.98 after previously forecasting an almost 3-mill increase to cover increasing operational costs, tend to employee raises and increase Starkville Parks Commission's funding so it could rein in its electric bills.
A mill currently brings less than $200,000 to city coffers.
SSD Superintendent Lewis Holloway and two school board members were called into a closed-door meeting with aldermen Tuesday but did not comment on the situation.
A call to Holloway went unreturned Wednesday.
"I've asked for clarification on the AG's opinion because one of the things that it doesn't clarify is if the city, in its own discretion, can transfer the funds to the school district. I am hopeful the city does have that discretion because the statute in question does reference the city's general fund or other funds," Wiseman said after Tuesday's meeting. "These were taxes collected by virtue of a special levy brought about by a referendum to build school facilities. You've got the additional issue that, because this was a tax levy on the residents of SSD, residents outside the city were taxed.
"It seems to me to be a breach of public trust to take tax dollars levied for the specific purpose of building school facilities, in some cases levied on residents outside the city of Starkville, and use those funds for general city purposes," the mayor added. "If the AG's office says we have no choice but to do that, we'll cross that bridge when we get there."
SSD projects a 65.24-mill tax levy to cover costs in its upcoming fiscal year, a slight increase from FY 2012-2013's and FY 2013-2014's 62.96-mill rate.
Under the proposed budget, the school district's expenditures increase by $7 million for construction costs, a line item covered by a previously approved levy the school board OK'd in anticipation of renovation projects prior to consolidation.
Property taxes are calculated with mills. One mill is worth one-thousandth of a dollar. For example, if the millage rate is 20 mills, you would pay $20 for every $1,000 of assessed value on your property. The assessed value of a property is the appraised value multiplied by the assessment ratio (10 percent for residential properties). A property assessed for $100,000 in this example would pay $200 in taxes.
Municipalities, counties and school districts each establish their own millage rates to meet budgetary needs.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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