The Oak Ridge City Council on Monday informally rejected a high school debt repayment proposal that officials said could have cost property tax payers an extra $10 million during the next few decades.
The proposal would allow the schools to keep a portion of more than $700,000 in revenues generated by a 2006 increase in the Anderson County sales tax rate. Until recently, all the money had been used to help pay down the debt on the $66 million renovation of the Oak Ridge High School.
But, in a months-old dispute, school officials argue they ought to be able to keep that portion of the new county sales tax revenues generated outside the city of Oak Ridge.
However, City Council members contend that the sales tax increase in the county essentially took away money from Oak Ridge, so the new county revenues, including those generated outside the city, should be used for debt repayments.
“It’s money that was stolen from all of us,” Oak Ridge City Council member Ellen Smith said. “People were not voting to increase their tax; they were voting to take away money from cities.”
Council member Charlie Hensley said the county tax increase should not be treated as a separate windfall for the Oak Ridge school system.
The Anderson County sales tax increase was approved by voters in rural areas and Norris in 2006. It came just two years after Oak Ridge voters overwhelmingly approved a half-cent sales tax increase to pay for the high school renovation.
Oak Ridge City Manager Mark Watson said the county vote caused some confusion, superseding the results of the 2004 Oak Ridge election by splitting the new sales tax revenues in half.
Council members suggested that shifting extra debt payment costs from the schools to the city could lead to service cuts or property tax rate increases.
“That’s the kind of breach of contract that the schools ought to avoid,” Smith said.
The draft debt repayment resolution discussed Monday was an attempt to clarify how the new county sales tax revenues received by the schools should be used. However, Monday night’s meeting was a work session, meaning no formal vote was taken.
Despite the informal rejection by City Council, the Oak Ridge Board of Education is still likely to vote on the debt repayment resolution in its own meeting on Monday, April 30, said Keys Fillauer, the school board’s chairman.
The high school debt is expected to be paid off by about 2041. The current debt payments total close to $3 million per year.