Zero for schools in 30-cent Washington Co. tax hike

JONESBOROUGH, Tenn. (WJHL) — Washington County, Tennessee’s proposed property tax increase leaves one major county operation on the outside looking in as an estimated $16 million of additional yearly funding comes online: public schools.

County commissioners recommended a 30-cent property tax increase — a 21% hike — Tuesday night in a 13-2 vote. A motion by Commissioner Jodi Jones to add 2 cents for schools (about $1.1 million) did not receive a second.

The lack of additional funding comes a year after the county changed how it allocates local option sales tax. Commissioners opted to retain half that money for the county budget instead of putting it all toward schools. The change decreases county schools’ revenue by about $2.2 million this fiscal year and lowers Johnson City schools’ funding by about $2.1 million as county education funding is split according to each system’s percentage of total enrollment.

The changes — combined with normal inflation and a state mandate to increase minimum teacher salaries to $50,000 by 2027 — leave the county’s school systems with some financial challenges.

“We’re going to continue to really look at all options and be good stewards and manage our available funds as much as we can,” Washington County School Superintendent Jerry Boyd told News Channel 11 Wednesday.

Washington County faces a $6 million deficit in its approved budget for the 2025 fiscal year, which begins July 1. The school board agreed to cover that amount out of the system’s fund balance, which Boyd said will probably be $10 million a year from now. He said that approach could likely only hold up for so long.

He said that was especially true because of the change in sales tax allocation.

“Hopefully, as we work hard to manage, we will still maintain, or if we can, grow the fund balance slightly, but we don’t have the opportunity because those funds are just not available to us,” Boyd said.

At Monday night’s commission meeting, Commissioner Ken Huffine asked Boyd what his request would be in terms of additional tax revenue and how it would be used.

“At minimum, I’ve referenced also the change in the rural local option sales tax revenue that went from 100% that went to schools to 50% that the law establishes as a minimum,” Boyd said.

“That’s real revenue that we will not realize based on the change that happened in the last budget.”

He told Huffine if that amount were replaced through property tax, it would almost certainly go toward meeting the state salary mandate. The county schools will need to add up to $3.6 million a year to their budget by 2027 to meet that requirement, which Boyd said they plan to do over two years. He said the state might end up covering some of that cost, but the county will almost certainly be on the hook for the majority.

“That’s the mandate to meet the minimum, so you know, we’re striving to be at the bottom in beginning teacher salaries and then after that we have to remain competitive,” he said in response to Huffine.

“There’ll be further discussions whether I’m standing at this podium or the next superintendent about how we’re going to stay competitive and attract the right people to our teams to serve our children.”

What about fund balance?

County commissioners have raised the issue of the school system’s fund balance numerous times during budget discussions. Boyd said the amount increased over recent years as sales tax revenues rose quickly and the schools were required to budget projected sales tax revenues very conservatively.

That often left the system with a growing fund balance over the years.

The removal of some of those sales taxes — both school systems still get large chunks of revenue from city-generated sales tax — will impact that, as will the OK to budget closer to projected revenues.

Unless schools cut their budgets or some other revenue source appears, Boyd expects the fund balance to decrease steadily over the next several years. In the case of the mandated teacher raises, Boyd expects little from the state.

“There is a view that the new funding formula (known as TISA) does address all of these needs, but most of the practitioners, most of the superintendents and all of those that deal with school budgets realize that that’s not exactly the case.”

He said a fund balance below 3% of annual expenses gets scrutiny from the state comptroller, and that anything less than 10% (currently around $10-11 million) gets his finance officer concerned.

Boyd made that point to commissioners Tuesday. He said replacing the amount lost from the sales tax allocation change would be a big plus. That would require about 8 more cents of property tax.

“I wouldn’t and did not expect the commission to consider the full amount,” he said. “Just somewhere from zero to the full amount to address the lost revenue that we do realize.”

Boyd said commissioners made their decision based on looking at the needs of the entire county and that he understands that. But he foresees a day when the school board will either have to cut spending or ask directly for funds that would require a tax increase.

“The salary increases for our teachers, the minimum salary scale or other costs that we’re presented with, it just limits our ability to manage those without having to go back to the county commission and request additional public dollars.”

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