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Homepage > Budget > Fact Checking the Claims of Andy McCready
November 3, 2017  |  By Mike Reis In Budget, Education, Elections, Taxes

Fact Checking the Claims of Andy McCready

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Today I read Andy McCready’s long opinion piece in the Pulaski Patriot.  While Mr. McCready uses many true facts, I could write 10,000 words about how they are presented without sufficient context.  However, I’ll focus on a few key points organized around his topic headings.

Pulaski County Spending:

While Pulaski County has increased its contribution to the school system, Mr. McCready fails to mention the context in which that has been done. Back in 2009, the Virginia General Assembly made structural changes to how the state funded schools to address the budget shortfall caused by the recession.  Those changes have remained, despite economic growth, and by some estimates shortchange localities across Virginia by $800 million a year. Capping support positions, extending the lifespan of school buses and other measures have dropped per student spending in Pulaski County by about $800 or almost 11%.  In 2009, Virginia contributed 63.3% of the school budget, by 2018 only 57.4%.  So while the County has increased the budget by $2.5 million, Virginia has dropped its contribution by $3.2 million. The School Board is doing more with less, even increasing staff positions relative to student population. To suggest otherwise is simply unsupported by the facts.

Existing County Debt:

While no current debt will be completely extinguished until 2023, we would only start paying back the middle school bonds in 2019.  If the referendum passes and we use a level payment structure, we will see a $531,000 surplus in 2022 (see page 7). The surplus grows to $1.1 million in 2024, almost $2 million in 2029, and we extinguish all of our existing debt by 2031. So there will be plenty of money to spend on existing School Board capital projects over the next 8-10 years, contrary to Mr. McCready’s assertions.  Conversely, according to the 2016-2017 budget, the Board of Supervisors has not allocated a SINGLE penny for the currently requested improvements to school buildings (see page 8).

County Debt:

If the referendum passes, the tax increase will generate about $3 million in additional revenue, bringing total debt payments to about $6.4 million.  Simple math will tell you that even $90 million dollars can be paid off in less than 15 years at a rate of $6.4 million a year, which if this were a mortgage for a house would be recommended by any financial adviser. Based on the numbers generated by Davenport & Co, even with the new middle school, Pulaski will only spend about 7% of its total yearly expenditures on debt payments, well below their recommended limit of 10% (see page 7).  As a comparison, Montgomery County spends around 14%, or almost $23 million EACH year, and still has a higher credit rating.  Not only does Montgomery have higher tax rates, but almost 50% higher valued property generating an average tax payment of over $1,300.  The average Pulaski County homeowner pays about $737, so even an increase of $150 a year (if the tax increase is $0.12) would mean we pay $400 less than the average Montgomery County resident. As noted above, there will be plenty of money to pay for capital expenses and/or fund a capital reserve to prevent this large of a tax increase from being repeated.

Taxes:

Mr. McCready is stating that employers may not expand or move here if the referendum passes.  Considering how much attention this issue has gotten, I’m surprised that not a single employer or prospective employer has stated this as an issue.  Most new or expanding employers (Red Sun, Korona, Phoenix) lease their space from the County and it currently costs the County $650,000 to pay off those loans and others. If the County is starved for cash for future economic development perhaps in future years it could use the $458,000 it’s spending on upgrades to the Administration building (page 6) or the $3.85 million its spending on the NRV Fairgrounds next year (page 7).  I’m assuming that the purchase of accounting and revenue software of nearly $1 million dollars also won’t be recurring expenses.  There will be plenty of money in the budget to fund economic expansion activities, and if we could fill up the Bob White Building (owned by the County) we would see even more funds available for economic activity (see page 4 of the Auditors report).  To imply that the County will be unable to fund economic development projects in the next 5 years is simply untrue.

As I’ve stated before, County taxes are going rise in order to address the issues with our schools. The reason we are seeing such a large increase is because for over 40 years we have failed to adequately either fund the major capital projects at our schools or set aside sufficient funds into a capital reserve to build new schools.  The result is that we have built two new schools (Pulaski and Riverlawn) and need to make a major investment in our middle school all within a span of less than 20 years.  Any suggestion that there is a more “affordable” option merely passes the cost onto the next generation instead of spending the money now for a long-term solution.

 

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Article by Mike Reis

Originally from NJ, now proud to call the mountains of Southwest Virginia home. Recovering lawyer, proud father of two, and husband. Give me a wave if you see me out on my bike.
Previous StoryTaxes will rise to pay for schools, regardless of vote on November 7th
Next StoryMeeting Tonight to Discuss Capital Projects for Schools

Comments: 1 reply added

  1. tmcgohey November 5, 2017 Reply

    Excellent rebuttal. I was already planning on voting yes on the school ref, but it's good to have relevant facts at hand regarding County finances.

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