Cary District 26 mulls over another tax hike request

Officials in Cary Elementary District 26 may ask voters for help in erasing a deficit - less than a year after voters soundly rejected a proposed tax hike.

The District 26 administration this week proposed placing a tax increase question on the ballot next February to fill a budget hole expected to grow from $1.9 million this year to $5 million next year.

Even if voters approve a tax increase, the district will probably still close a school because of declining enrollment. Last month, Superintendent Brian Coleman recommended closing Maplewood Elementary School, the oldest and smallest school in the district.

"Tax hike or no, it's very clear that one building needs to be closed," Finance Committee Chairman Chris Jenner said. "Our current attendance and our current capacity doesn't support us operating six schools."

The proposed increase would raise the tax rate for the education fund - the main fund that pays for most daily expenses like salaries - by 70 cents per $100 of equalized assessed value, officials said.

That would generate an estimated $2.5 million for District 26 in the 2010-11 school year. Under the administration's proposal, the district would also cut $2.5 million from its budget, including closing a school.

"We'll meet the taxpayers halfway," District 26 Director of Finance and Operations T. Ferrier said. "We have 2.5 (million dollars) in cuts to make, so closing a school would be part of that."

To offset the rate increase, District 26 administrators have proposed refinancing some of the district's debt to reduce the bond tax rate by 20 cents. Refinancing typically results in lower annual payments but higher interest costs in the long term.

"Because 70 cents is so high, we recommended a bond rate refinancing," Ferrier said. "The overall effect to the taxpayer would be 50 cents."

The district estimates the owner of a $300,000 home would pay an additional $473 annually in taxes.

District 26 board members acknowledged that given the state of the economy and the failure of the last tax increase request, passing a tax increase at this point is an uncertain prospect at best.

"I believe a referendum is a long shot," new board member Jason Larry said. "We need to have a solid plan to get $5 million of budget cuts and not count on a referendum because a referendum is out of our control."

Jenner wants the finance committee to reach a consensus on pursuing a referendum and closing a school at Monday's meeting so the full board can act before a November deadline to put a question on the February ballot.