School SPLOST Is New Tax

Read the column here (30 October 29011).

O.C.G.A. really doesn’t make a distinction between county SPLOSTs and school district SPLOSTs insofar as terminology is concerned, and whatever terminology is used by others is frequently used inconsistently. For the sake of clarity, I have used the term “ESPLOST-4”. That is the term used by Charlie Maddox in his earlier opinion piece, short for Education SPLOST 4, which appears to be the preferred term of the CCSD.

When I cast my “early” vote down at the Board of Elections office on Tuesday, 18 October, no sample ballot had been posted on the Board’s web site. I do not know when the sample ballot was posted, but it can now be found here:
http://www.athensclarkecounty.com/DocumentView.aspx?DID=4159

Here is the resolution approved by the Board of Education back during its called meeting of 27 June, 2011 on which the above ballot resolution is based. I got it from the Clarke County School District’s PR office, as the attachment was not included in either the online agenda or minutes archived on the CCSD web site for the meeting (it was the first item under New Business). Note that it is just as vague and unspecific as the ballot resolution (county governments and school districts having learned the utility of vagueness insofar as their SPLOST project descriptions are concerned – can you say “Tennis Center?”):
https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BwYXo...

For the legalese that covers these matters, see O.C.G.A. Title 48, Chapter 8, Article 3, Part 1 (County Special Purpose Local Option Sales Tax) and Part 2 (Sales Tax for Educational Purposes):
http://www.lexisnexis.com/hottopics/gacode/default.asp

Clarke County School District Education SPLOST FAQs (I also have a separate 2-page PDF specifically on Education SPLOST-4 that was on the CCSD web site, but I cannot find that link now):
http://www.clarke.k12.ga.us/files/4393/splost-faq.pdf

A trio of further thoughts:

Years ago, I asked some questions as the result of the approval of ESPLOST-3 and its associated bond issue. The CCSD’s portion of the local property tax millage rate has been at the 20 mills limit for years; to exceed that limit would normally require the voters’ approval to do so via a referendum. So how could that limit be administratively traversed so as to make up a SPLOST revenue shortfall without a referendum? After a long and circuitous journey through a variety of local and state government bureaucracies, the Attorney General’s office provided me with the relevant Georgia Supreme Court case law, Seaboard Air-Line Railway Company v. Wright, comptroller-general, et al., from way back in 1927, that exempted bond debt service from any constitutional limit. I do not agree with the reasoning embodied in that decision, as it would seem to render the rationale for the 20 mills limit moot, but the case law is what it is.

In order to raise ESPLOST-4's hoped-for $24 million per year in sales tax revenue rather than the expected $21 million per year, the purchase of an additional $300 million per year of taxable goods and services would have to occur in Athens-Clarke County. That works out to a $1.5 billion increase in taxable purchases over the five-year duration of ESPLOST-4. Any such increase is highly unlikely – and how – so why word the referendum that way? Because the CCSD is greedy and wants to hedge its bets just in case, that is why. And if $105 million is expected to pay for the projects included in ESPLOST-4, for what would the additional $15 be used?

Ostensibly, the idea is that by issuing bonds, thereby getting a significant portion of the levy’s anticipated revenue immediately, any construction costs increases that occur over ESPLOST-4's five-year duration can be avoided (this practice is typically referred to as “forward funding”). “Ostensibly,” I say, because when I quizzed the powers that be over how much money the CCSD was going to save by employing this strategy with the bonds issued as a part of ESPLOST-3, none of them could even hazard a guess as to how much would be saved, or even how such a figure may be calculated. I, like they, was just supposed to accept the reasoning as a matter of unverifiable faith. Besides which, I would argue the assumption that construction costs must invariably rise has been disproven in recent years.

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Questions About Clarke ESPLOST

Read the column here (13 November 2011).

The eighth paragraph should read, with a close quotation mark: . . . indebtedness of the school system." If no such debt exists . . .

As I noted in the comments for my previous column:

“O.C.G.A. really doesn’t make a distinction between county SPLOSTs and school district SPLOSTs insofar as terminology is concerned, and whatever terminology is used by others is frequently used inconsistently. For the sake of clarity, I have used the term 'ESPLOST-4.' That is the term used by Charlie Maddox in his earlier opinion piece, short for Education SPLOST 4, which appears to be the preferred term of the CCSD.”

Even so, the preferred terminology seems to have changed over time; note that ESPLOST-4 and SPLOST 4 are the same thing (as are ESPLOST-3 and SPLOST 3).

I must confess that the folks over at the Department or Revenue get high marks insofar as helping me out is concerned. When I first called in with my questions, I got transferred/referred hither and yon which, of course, is par for the course. I finally ended up in the telephone of an attorney in the Office of Tax Policy who could not have been nicer or more helpful. Over the course of several conversations, we reviewed with the applicable provisions of the Constitution, O.C.G.A., and the Department of Revenue regulations (with which I am familiar and had right in front of me before I made any calls). Additionally, the good fellow searched case law and opinions issued by the Attorney General’s office. He then referred me to another fellow in the Local Government Services Division (formerly the Property Tax Division) with whom he had discussed my questions and I covered the same ground with him. Although they would not tell me that I was legally correct, not being in the business of providing “legal advice” to folks on the telephone, neither could they, on the basis of whatever material to which they had access, point out were I was incorrect. In fact, both indicated that mine would seem to be a “reasonable interpretation” of the issues involved.

Be that as it may, here is the source material for you to read for yourselves:

State of Georgia Constitution Article VIII, Section VI, Paragraph IV

(a) . . . This tax shall be at the rate of 1 percent and shall be imposed for a period of time not to exceed five years, but in all other respects, except as otherwise provided in this Paragraph, shall correspond to and be levied in the same manner as the tax provided for by Article 3 of Chapter 8 of Title 48 of the Official Code of Georgia Annotated, relating to the special county 1 percent sales and use tax, as now or hereafter amended. . .

(b) The purpose or purposes for which the proceeds of the tax are to be used and may be expended include:(1) Capital outlay projects for educational purposes;(2) The retirement of previously incurred general obligation debt with respect only to capital outlay projects of the school system; provided, however, that the tax authorized under this Paragraph shall only be expended for the purpose authorized under this subparagraph (b)(2) if all ad valorem property taxes levied or scheduled to be levied prior to the maturity of any such then outstanding general obligation debt to be retired by the proceeds of the tax imposed under this Paragraph shall be reduced by a total amount equal to the total amount of proceeds of the tax imposed under this Paragraph to be applied to retire such bonded indebtedness. In the event of failure to comply with the requirements of this subparagraph (b)(2), as certified by the Department of Revenue, no further funds shall be expended under this subparagraph (b)(2) by such county or independent board of education and all such funds shall be maintained in a separate, restricted account and held solely for the expenditure for future capital outlay projects for educational purposes; or(3) A combination of the foregoing.

(h) Excess proceeds of the tax which remain following expenditure of proceeds for authorized projects or purposes for education shall be used solely for the purpose of reducing any indebtedness of the school system. In the event there is no indebtedness, such excess proceeds shall be used by such school system for the purpose of reducing its millage rate in an amount equivalent to the amount of such excess proceeds.

http://sos.georgia.gov/elections/GAConstitution.pdf

O.C.G.A. Title 48, Chapter 8, Article 3

Part 1 County Special Purpose Local Option Sales Tax

§48-8-110. Definitions(1) "Capital outlay project" means major, permanent, or long-lived improvements or betterments, such as land and structures, such as would be properly chargeable to a capital asset account and as distinguished from current expenditures and ordinary maintenance expenses. Such term shall include, but not be limited to, roads, streets, bridges, police cars, fire trucks, ambulances, garbage trucks, and other major equipment.

§48-8-111. Procedure for imposition of tax; resolution or ordinance; notice to county election superintendent; election

This section gives lots of examples of permissible “capital outlay projects” for a variety of different categories, none of which even remotely sounds like the study the CCSD is wanting to retroactive fund using SPLOST-4 revenue.

Part 2 Sales Tax for Educational Purposes

§48-8-140. Authority for and legislative intent of articleThis part is enacted pursuant to the authority of Article VIII, Section VI, Paragraph IV of the Constitution of Georgia and it is the intent of the General Assembly in the enactment of this part to further define and implement such provision of the Constitution.

http://www.lexisnexis.com/hottopics/gacode/default.asp

Department of Revenue Regulations - Sale and Use Tax Division

Chapter 506-12-7 Educational Local Option Tax560-12-7-.01 Definitions.(1) The term “Educational Local Option Tax” as used in these regulations shall mean the1% sales and use tax for use by the School Board of such counties and/or independent school boards as authorized under provisions and conditions of Article VIII, Section VI, Paragraph IV of the Georgia Constitution.(2) The term “Educational Local Option Tax Act” as used in these regulations shall mean Act No. 19 (Resolution No. 728) set forth in the Georgia Constitution authorizing a 1% sales and use tax for such School Board or School Boards of Education located within a county.(3) The term “School Board” as used in these regulations shall include any Board of Education of such school district in a county or the Board of Education of any independent school district authorized to levy an Educational Local Option Tax under the authority of Article VIII, Section VI, Paragraph IV of the Georgia Constitution.(4) The term “State Sales and Use Tax Act” as used in these regulations, shall mean the Georgia Retailers’ and Consumers’ Sales and Use Tax Act, approved February 20, 1951(Ga. L. 1951, p. 360) as amended.

http://rules.sos.state.ga.us/cgi-bin/page.cgi?g=DEPARTMENT_OF_REVENUE%2F...

Clarke County Board of Education - Minutes of September 2010

Board approval was requested for a contract to complete a district-wide building and site condition assessment related to planning for SPLOST 4 needs and priorities. A Request for Proposals was advertised in the local newspaper and posted on the School District website. Twenty-four firms attended the mandatory pre-proposal meeting and nine firms responded. Guaranteed maximum prices for the scope of work ranged from $37,500 to $391,000. All submittals included commitments to meet the completion deadline of November 12, 2010.

The costs shall be forward funded and included as a reimbursable amount in the referendum for SPLOST 4.

Superintendent’s recommendation: Approve a contract with SP Design Group at a Guaranteed Maximum Price of $37,500 and establishment of a $10,000 contingency for owner-requested additional services.

See pages 3-4 for the agenda item, which was passed by unanimous vote as part of the New Business Consent Agenda

http://www.clarke.k12.ga.us/files/35355/minutes%209-9-10%20regular%20mtg...

Clarke County Board of Education – Minutes of June 2011

Memorandum: Funding for Architectural Services (Maxine P. Easom Elementary)

The maximum design phase expenditure will be four percent (4%) of the construction budget of $9.1M (total design cost $364,000).

The proposed construction schedule for this new school, if approved by the voters in the November 2011 SPLOST 4 referendum, requires commencement of the project in early 2012. Thus, the design work must begin very soon to meet this accelerated schedule.

Funding for the design costs will be provided in the SPLOST 3 budget for general contingencies.

On both the agenda (page 44) and the minutes (page 2), the item is the second one under New Business. It passed by unanimous vote.

http://www.clarke.k12.ga.us/files/filesystem/062711BOEPacket.pdf
http://www.clarke.k12.ga.us/files/35355/june%2027%20-%20called%20meeting...

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SCHS Pigskin Update

After falling behind by a touchdown early in the contest, my alma mater Indians posted a slew of unanswered points on a turnover-plagued Lumpkin County squad en route to a 40-7 victory last week at The Reservation. 

This week, the Indians (7-1, 4-0) travel to Gainesville to take on North Hall in the regular season finale for both teams.  The Trojans (4-4, 3-1) are coming off of a 54-37 home loss to Franklin County.

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Raising Cain

Okay, so the title of this post is not very original.  As readers can plainly see by glancing to either side, though, I am indeed supporting Herman Cain for the GOP presidential nomination.  I shared a table with Mr. Cain and one of his friends/campaign advisers when he was running for the Republican nomination for the U.S. Senate against Johnny Isakson back in 2004.  He was in town for a fundraiser at Outback Steakhouse and, after the function, graciously let me visit with him for a bit as he partook of the fare.  I still have the "Cain Crusader" pin I got at the time.

I may not agree with Herman on every issue, but then I will not agree with any candidate on every issue.  I do, however, agree with him on the ones that are important to me and think that someone from outside the Wasington establishment is needed to address the problems that seem to be endemic there.  I think that the more real folks meet and hear Cain, the stronger his candidacy will become.  Certainly, the amount of attention directed his way by media and pundit types has increased dramatically in recent weeks (not all of it positive, naturally).

Speaking of the "establishment," I remain skeptical about the GOP's national insiders.  While I think that Mitt Romney would be a vast improvement over the current occupant of the White House, I do not like the idea that Romney, as the establishment candidate whose turn has come, should be annointed just yet.  We tried that with Bob Dole and John McCain (both of whom for which I have great personal respect) and we see how that turned out.  I understand that establishment Republicans may be annoyed with the TEA partiers and their seemingly strident attitudes, but if the GOP had been doing what it should have for the past several years, such would not be an issue now.

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SCHS Pigskin Update

Since last we checked in with my alma mater Indians, SCHS has recorded two more victories, a 28-0 road win over Chestatee and a 25-14 home win over White County.

The Reservation will be awash with Indians this coming Friday evening, as the Toccoa variety (6-1, 3-0) hosts to the Lumpkin County variety (4-3, 1-2) making the trip down from Dahlonega.  A couple of facts that may auger well for the home team is that Lumpkin County has yet to win on the road this season and has been pounded in its last two games.

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SCHS Pigskin Update

My alma mater Indians defeated the Franklin County Lions by the score of 24-7, the team’s fourth consecutive victory.  Stephens County and neighboring Franklin County have been rivals since way, way, way back when both were AA schools.

This coming week, the Indians (4-1, 1-0) travel to Gainesville to face Chestatee.  The War Eagles (3-2, 0-1) are coming off of two straight defeats.  It will be the second 8AAA Division A game for both schools.

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Impertinent Observations (Guineas & Gunny edition)

Our flock of free-range, wandering guineas, and by that I mean the ones that have adopted our neighborhood, has grown.  Instead of the original three (two males and one female – we think based on their plumages), we now have five (three males and two females – again, we think).  They can be kind of noisy, but their social antics are quite endearing.  And yes, I took the picture.

Missus TOA accompanied me to the GSSF match down below Conyers last weekend. I was very pleased with my scores for the first two stages that I shot.  On the third, however, I incurred 19 penalty seconds on the 20- and 25-yard targets.  Even so, the preliminary scores have me 90th in the Amateur Civilian category out of 402 entries.  Placing in the 77-78th percentile is not so bad considering I never practice.

The big news, though, was meeting R. Lee Ermy in the flesh (for those not in the know, Gunny is a spokesman for GLOCK in addition to his other endeavors).  We were just leaving the armorers tent when "the Gunny" came by in a golf cart with a plate of food in hand.  As he alit, my wife wanted to meet him.  She greeted him with a big "Hoorah!," to which he responded with an equally big "Hello, darlin'!" and an even bigger hug. She said that the meeting made her day, so I was doubly glad that she went with me. And yes, he looks just like he does on TV, only taller.

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SCHS Pigskin Update (belated)

Since last we checked in on high school football, my alma mater Indians posted a couple of impressive victories over teams from 8AAA Division B.  First came a 38-10 win over the Oconee County Warriors at The Reservation on 09 September, followed by a 44-14 decision over the West Hall Spartans at Oakwood on 16 September.

After an open date this week, the Indians (3-1, 0-0) face long-time rival Franklin County (1-2, 0-0) at The Reservation for their first region 8AAA Division A game of the year on 30 September.  In the meantime, the Lions will play host to the mighty Gainesville Red Elephants this week.

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GOP Presidential Contenders Duel Over Social Security

In today's edition of the WSJ, the editorial board contrasts the position of Texas governor Rick Perry with that of former Massachusetts governor Mitt Romney.   They criticize Perry for being correct but engaging in rhetoric that is too harsh, while Romney is too Obama-like in his defense of the status quo.

Be that as it may, for my money this is the best part of the editorial:

Even a pyramid system such as this could be solvent if it took advantage of compound interest. But the overriding problem is that not a dime of the payroll contributions the government collects over a lifetime is saved and invested for a worker's retirement. Social Security's pay-as-you-go financing model means that 12.4% of all wages are transferred to current beneficiaries, the surplus dollars are spent by Congress on other things, and Social Security gets an IOU from the Treasury.

In other words, the program is building up debt even as benefits become less sustainable as the baby boomers begin to retire and the ratio of workers to seniors shrinks. The feds will then have to pay out of other tax revenue to meet Social Security's obligations.

The key point is that, unlike a Ponzi scheme, Social Security can be reformed and it will have to be if current workers are to receive any return on their current taxes. Everyone serious knows what the reform options are—from changing the benefits schedule, to "progressive indexing," to raising the retirement age. We'd prefer private accounts so that young people could build wealth as a property right and not depend on the promises of politicians, while the money would be put to productive economic use in the meantime. Herman Cain mentioned it in last week's debate. But if that's too politically adventurous for the two Governors, maybe they can meet somewhere in between their rhetorical positions.

To me, this is just one more reason to like Herman Cain.

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SCHS Pigskin Update

My alma mater Indians posted a 39-0 blowout win in their home opener over the Hart County Bulldogs last Friday. This week, the Indians (1-1, 0-0) will host 8AAA Division B foe Oconee County (1-0, 0-0) at The Reservation in Toccoa. The Warriors are coming off of a 35-0 road win over East Jackson.

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