Sunday, January 09, 2000

Schools nervous about possible change in taxes

State collection could cost them

The Cincinnati Enquirer

        Two proposals headed to the Kentucky General Assembly proposing to change the way utility taxes are collected have schools worried about lost revenues.

        The telecommunications industry wants a streamlined statewide collection system to replace the individual collection systems in each of the 155 school districts with a utility tax.

        Gas and electric providers favor local collection but want to pay taxes on the unit of consumption rather than the dollar value of the transaction.

        Such changes could mean:

        • More tax monies by making it easier to get payments from out-of-state companies.

        • Additional costs for a state collection system.

        • Taxpayer money from one municipality might end up in other parts of the state.

        “There are a lot of issues and unanswered questions to this,” said Ora Cobb, Bellevue Schools superintendent. “My biggest concern is that the state would collect from all residents in the state.”

        All but 21 of the state's 176 school districts now rely on a utility tax for revenue.

        That could be a problem for a district like Bellevue, which has no utility tax. If the state collects the revenue from all residents and none of it is slated to go back to the school district, that money could be sent elsewhere.

        Dr. Cobb said he also wonders what happens to a city. Bellevue schools now pay between $35,000 and $40,000 a year in city utility taxes. But how much of that money would end up back in city coffers if it first went to the state?

        Such questions are hard to answer because there is a lack of good data, said Kyna Koch, Kentucky's director of school finance.

        “Both industries are trying to pull together specific data for individual school districts to get some good numbers,” Ms. Koch said. “The problem is there are a lot of unknowns.”

        Representatives for both industries said they think more taxes will be collected under their proposals, but there is no way to know how much more.

        There is also no way to know how much it might cost the state to make those collections.

        “Schools have a right to be concerned, but the Education Department has been working very closly with the industries and legislators and they all agree schools need to be protected,” Ms. Koch said.

        Ron Miller, spokesman for Louisville Gas and Electric, said his company did not want to comment on the proposals this early in the process.

        Tom Luber, an attorney for the Kentucky telecommunications industry, could not be reached for comment.

        Fred Bassett, Beechwood Schools superintendent, said schools are already struggling to generate additional monies.

        “Utility taxes or permissive taxes and occupational taxes have become more and more important, and more districts have passed them because of the drop in the percentage of the state budget going toward education,” Dr. Bassett said.

        Beechwood receives $243,959, or 6 percent of its $4.16 million general fund, from such permissive taxes.

        Many educators claim that since the 1990 passage of the Kentucky Education Reform Act, the percentage of the state's budget used for education has declined.

        At the same time, only three of the state's 176 school districts have been able to get voter approval for a tax increase.

        School districts can increase taxes up to 4 percent each year without going to voters.

        Beechwood increased property taxes; Fort Thomas increased a utility tax and Owen County voters approved a property tax increase.

        Boone County and Bellevue schools had utility tax initiatives fail at the polls.

        “We are very concerned,” said Brad Hughes, spokesman for the Kentucky School Boards Association (KSBA). “The major concern we have is a loss of revenue. No one has been able to even put a guesstimate together of how much the winners and losers would be if this passes.”

        The Education Department expects the gas, electric and telecommunications industries to each file legislation to push their own agendas.

        The KSBA, as well as many school districts and cities, plan to fight those proposals, at least until more specific facts are available.


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