A proposal to resolve a dispute over sales tax revenues and high school debt had majority support during a non-voting joint work session of Oak Ridge City Council and Board of Education on Friday.
Note: This story was updated at 1 p.m.
It hasn’t been approved yet, but a majority of city and school officials on Friday said they support a proposal that would resolve a long-running dispute over whether to use some sales tax revenues collected in Anderson County to help pay for renovations of Oak Ridge High School.
The dispute has centered on how to use a portion of new sales tax revenues collected in Anderson County outside of Oak Ridge under a May 2006 referendum. School officials had argued they could keep that portion of the revenues, but municipal leaders had said the money should be used to help pay down the debt on the $66 million renovation of the high school.
The amount of money in question is in the range of $250,000 to $300,000 annually, although the total varies from year to year.
A new joint resolution that could be considered by the Oak Ridge Board of Education on Monday and the City Council on March 3 would allow the schools to keep its portion of the new Anderson County revenues. (Some of the revenues are also distributed to Clinton and Anderson County schools.) However, the resolution spells out how the money has to be spent in Oak Ridge: on technology enhancements, debt reduction, capital repairs and equipment, and grant matches and innovative educational projects.
The agreement would be in effect until the high school debt is paid or 2041. Most officials said it would allow the two sides to “move forward” and work together.
“I do think this represents a true compromise,” said Bob Eby, Oak Ridge school board vice chair.
“I am very willing to compromise and go (along) with my friends on the school board,” Oak Ridge City Council member Charlie Hensley said. “We’re getting together and putting this issue behind us.”
Still, there were some questions about the proposal, the product of 100 hours or more of discussion and research, and it’s not clear that it will be approved unanimously.
Oak Ridge City Council member Trina Baughn pressed for details on exactly how much the proposal would cost taxpayers. She said officials were being rushed into a decision that could have an impact for decades. She estimated that having the city make up the $250,000 to $300,000 per year until 2041 could cost about $8 million. She said school officials have been holding money captive since June 2012.
“An election and getting along is not more important than doing right by the taxpayer,” Baughn said.
City Council member Anne Garcia Garland said the school board’s unilateral decision on the county sales tax revenues had severely damaged her interest in cooperating.
“I don’t know what it’s going to take to undo that,” Garcia Garland said.
School officials had argued since at least 2012 that they can keep that portion of the new county sales tax revenues that are collected outside the city of Oak Ridge. Previously, all of that money, as well as the revenues collected inside the city, were used for high school debt payments.
School officials said the money was forwarded to Oak Ridge under a five-year “gentleman’s agreement” and should now be used for operational expenses.
But municipal officials had disagreed. They said the county sales tax increase in 2006 essentially took away money from the city. They argued that the new county revenues, including the money generated outside the city, should be used for debt repayments.
Oak Ridge voters overwhelmingly approved a half-cent sales tax increase for the high school renovations in an August 2004 referendum, but city officials said the subsequent county referendum less than two years later effectively created a new formula for the distribution of sales tax proceeds to Oak Ridge, Clinton, and Anderson County schools.
There has never been a dispute over how to use the new county sales tax revenues collected inside Oak Ridge after the 2006 county referendum—or how to use the revenues collected under the 2004 municipal referendum. Both sides have agreed that those revenues should be used for high school debt.
But the dispute over the county sales tax revenues collected outside the city led to a City Council decision in May 2012 to withhold $766,000 from the schools.
That May 2012 decision was then later blamed as the cause of a $250,000 shortfall that led to the threat of a school shutdown late last summer after the school system failed a state maintenance of effort test. The threatened shutdown was avoided after the Oak Ridge City Council agreed in September 2013 to give the school system another $250,000.
On Friday, Oak Ridge Mayor Pro Tem Jane Miller said the business community and other residents had grown weary of hearing about the dispute, and she welcomed the chance to “move forward.”
“Compromise never makes everybody happy,” Oak Ridge Mayor Tom Beehan said. “I think the ultimate thing that we got here is moving forward.”
The joint resolution would also have the City Council and School Board set up an annual joint capital improvements program, or CIP, to establish priorities for repairs and replacements, new services, technology enhancements, and public safety as determined by the superintendent and city manager. It would also establish a joint city/education committee to review city and schools priorities and legislation, anticipate future bonding needs, and coordinate with necessary support entities such as the Oak Ridge Education Foundation or state agencies.
