Wake County voters could decide as soon as May if they want to borrow about $1 billion to help build new schools and renovate older campuses.
The groundwork for a May 2018 bond referendum kicked off this week with both the school board and Wake County commissioners reviewing the steps that need to be taken over the next few months to put a proposal on the ballot. Some big questions need to be resolved, including whether commissioners want to minimize any potential property tax increase that would be included as part of the bond referendum.
“There’s a question about the appetite for a tax so they (commissioners) want to have a discussion about whether or not the Board of Commissioners would be doing a tax increase,” Assistant Superintendent Joe Desormeaux told school board members on Tuesday.
Commissioners have raised property taxes four years in a row to help pay for items such as more money for schools and for human services. Voters also agreed last year to raise the sales tax rate by a half-cent to help pay for increased public transit options.
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Wake’s property tax rate of 61.5 cents per $100 of valuation is lower than the rate in many large North Carolina counties. The owner of a $300,000 home in Wake pays $1,845 a year in county property taxes.
The continued tax increases are a reason why the majority of commissioners voted this year to provide the school board with a $21 million increase instead of the requested bump of $45 million.
Sig Hutchinson, chairman of the commissioners, said in an interview Tuesday that he thinks “voters will step up and support this referendum” for schools. He said he realizes voters can become wary of being asked to dip into their own pockets.
“There’s always that concern,” Hutchinson said. “And obviously we want to be responsible.”
The lingering bad blood over this year’s budget fight was still apparent Tuesday with school board member Jim Martin warning commissioners would use the tax increase for the school bond against their efforts for more funding to operate schools. Both boards have Democratic majorities.
“The whole tax appetite argument, they’re going to use like a hammer,” Martin said.
The size of property tax increases to repay school bonds has been a constant issue over the years in Wake, leading commissioners to limit how much they put on the ballot. Wake voters last approved a school bond in 2013, agreeing to borrow $810 million to help build and renovate the schools built in the last four years.
The school system created its rolling seven-year, $2 billion building plan on the assumption that commissioners would approve a property tax rate increase in 2018 of 3.25 cents, or $97.50 more per year on a $300,000 home. If commissioners go with a smaller tax increase or none at all, the district would have to scale back what it builds.
Hutchinson said there’s no need for the next school bond referendum to be $1 billion. He said a tax increase of 3.25 cents would amount to about $640 million for the next two years. More funding would be needed later.
“A billion dollars is not in the plan,” Hutchinson said. “We don’t need that right now.”
But Hutchinson said he’d prefer the bond to be on the ballot in November 2018, when there will be higher voter turnout because of the general election. A May referendum would have lower turnout since only primary elections would be on the ballot.
“It’s going to be a year for Democrats,” Hutchinson said, adding that Democrats “tend to support school bonds.”
The school board would have to revise the building program since it’s built on the assumption of getting money from a spring 2018 referendum. A fall bond vote would mean the money wouldn’t come until 2019.
The potential school bond referendum may also have competition on the 2018 ballot. Commissioners are considering asking voters to support raising the sales tax rate by a half-cent to pay for affordable housing and parks.
Another wild card in the school building program is finding more classroom seats to deal with smaller class sizes in kindergarten through third grade mandated by state lawmakers. Wake will have to create space for the equivalent of 9,500 students, or 14 more elementary schools.
In the short term, Wake is looking at options such as converting art and music rooms into regular classroom spaces and moving students to schools that have more space.
Desormeaux said too many of the projects planned in the next two to four years can’t be delayed to try to find more money for K-3 seats. School board member Don Agee suggested redoing school designs to cut costs, which Martin argued shouldn’t be done.
“We need to be building schools,” Martin said. “We don’t need to be building warehouses. Let’s get through this discussion about cheapness.”
In 2016, both boards decided to change the way they handled school construction projects by switching to a seven-year plan that’s updated annually. The commissioners agreed to fund the first two years of the plan by issuing bonds that didn’t require voter approval and didn’t require a tax increase.
The seven-year plan was built on the assumption that both boards would work toward a spring 2018 bond referendum. To meet that timeline, the school board will need to make a request by early December and the commissioners will need to vote in February to put a referendum on the ballot.
“The bond referendum was in the discussion when we began the seven-year rolling cycle,” said school board member Bill Fletcher, chairman of the facilities committee. “It’s time for the county commission to put that before the public.”
Staff writer Sarah Nagem contributed.