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Nickel Tax vote Tuesday

Next Tuesday McCreary County voters will head to the polls to decide the fate of the proposed nickel tax from the McCreary County Board of Education.


The tax has proven to be controversial as opponents of the increase took to the streets with a petition calling for a special election to recall the tax.

McCreary County Board Superintendent Mike Cash has pushed hard for the tax, stating the move is for the betterment of the health and safety of students in the District, while opponents claim the tax would be an additional burden on an already over-taxed populace.

The Recall Committee, who collected the signatures for the petition, question the spending habits of the Board of Education, contend McCreary County citizens can not afford to pay more in taxes, and wonder if the Board will continue to raise taxes in the coming years.

All McCreary County polling places will be open from 6:00 a.m. to 6:00 p.m. on Tuesday for the election. Voting at McCreary County Middle School will be held in the cafeteria, as opposed to the usual location in the gym due to a conflict with a previously scheduled open house at the school.

The nickel tax is called as such since it is basically an additional assessment of five cents per every $100 of value on property.

As 100 percent collection is impossible to achieve, the Kentucky Department of Education allows the actual rate to be higher to compensate for the lost revenue.

If the tax remains in place the property tax rate for the coming year would increase from 41.9 cents per $100 of assessed value to 47.7 cents – an increase of 5.8 cents.

According to the Kentucky Department of Education and state statutes, any revenue generated from the additional tax must be spent on new construction, renovation, maintenance and debt service from the projects, and all projects must be approved by the KDE before implementation.

McCreary County Schools Superintendent Mike Cash states the primary reason for imposing the tax will be the replacement of the roofs at McCreary Central High School and Pine Knot Primary, as well as the construction of a new wing at McCreary County Middle School to add additional classroom space and new science facilities. The roofing projects are estimated to cost about $3 million and the Middle School addition would be about $4 million.

With only a bonding capacity of about $1 million now, the new tax would raise that limit to about $13 million – allowing for the construction.

Opponents to the tax question the need for the District to take on additional debt.

The District is already paying about $1 million annually in debt service for prior construction projects. The construction of Whitley City Elementary School (2004) and renovation and addition to McCreary Central High School (2008) are two large projects on the books, which were financed for 20-years. The high school project had been recently refinanced in order to secure a lower interest payment.

Most recently the District has replaced the roof at Pine Knot Intermediate School due to leakage and mold issues, completed major repairs to the foundation, roof and parking lot at McCreary Middle School after serious structural issues were discovered, constructed a new locker room/concession stand for the softball field (under Title IX directives the facility needed to be installed or the District would loose all federal funding if not completed).

Other long-term debts held by the District include the recent Guaranteed Energy Savings Contract, which would cost about $9 million over the course of the contract, but 90 percent of that cost is expected to be recouped due to savings in energy costs over the years. Under the terms of the contract, if the savings are net met, the company that conducted the renovations will compensate the District for the shortfall.

The BOE is also paying a long-term bond on the Kentucky School Board Insurance Trust assessment. In 2013 the insurance carrier announced its dissolution due to debt issues and assessed additional costs among school districts across the state in order to settle the debt.

The McCreary County School District had a policy with KSBIT for 16 of the previous 23 years and was hit with an assessment totaling more than $500,000 at the time. The McCreary County BOE agreed to a 15-year bonding issue to pay their share of the assessment at the time.

Other projects recently conducted in the District, such as a renovation at the Board office, installing new floor tiles at some schools, work on gym floors and the renovation of the high school track were not financed, and the cost came out of existing monies in the General Fund or other funds.

All told the overall debt to the District is about $31 million.

Opponents also question the BOE’s surplus funds of about $1.5 million. State law requires districts to maintain at least 2 percent of their annual budget in reserve. When Superintendent Cash assumed office he urged the Board to raise the contingency to 5 percent.

He noted the additional contingency is necessary since the monthly operating cost of the District runs about $1.1 million, and that money needed to be held in reserve to be used in the event of an unexpected decrease in funding from the state or federal level.

In a recent interview Superintendent Cash stated the main driving force behind the School District asking for the increase was a recent revision of the District’s Facility Plan.

Kentucky law stipulates a school district must update its plan every four years – detailing planned or projected construction projects.

An architect and engineers from the state visited the various buildings in the District to provide input on what repairs and improvements need to be made to the facilities.

A committee of 20 individuals, consisting of members of the District and private citizens, worked together to examine the findings of the report and detail a projected plan to prioritize needed repairs and construction.

The panel listed three projects as top priority, meaning the District must attempt to do those projects first before undertaking any other items in the plan.

The three priorities identified were new roofing at the high school and Pine Knot Primary School (Now known as Pine Knot Elementary) and the construction of a new science wing at the middle school.

The roofs were considered a priority as both schools have developed leakage from the old roofs, and District officials say it could present a risk to students’ health and safety if not fixed.

Portions of the roof at McCreary Central High School date back to the original construction of the building in 1978 and PKP’s roof is nearly as old, and officials say both are in desperate need of replacing.

Cash has stated that maintenance staff has performed spot fixes over the years to fix leaks, but engineers have identified 350 “bubbles” on the roof at the high school that could burst at any time, causing more leaks and potentially damage equipment and cause mold problems.

Cash also noted the engineers predict mold issues at PKP, similar to the ones discovered at Pine Knot Intermediate when the roof was replaced recently. During that construction several patches of black mold were found in insulation and air vents, likely caused by leaks.

Those two projects would cost an estimated $3 million to complete according to the facility plan.

The wing at the middle school is part of a longer-ranged plan to move sixth grade classes to the facility. The new construction would include new science labs, two classrooms, band room and a technology area.

An additional benefit of building additional space at the middle school would be to free up classroom space in the elementary schools – allowing the District to implement a full-time pre school program, instead of the half-time program in place now, Cash said.

Together the three projects identified as top priorities in the facility plan amount to about $7 million.

Additional potential projects listed on the facility plan are considered lower in importance, and constitute a “wish list” according to Cash.

All told, the facility plan contains about $26 million worth of projects, but Cash has stated only the first three prioritized items are up for serious consideration.

Cash said the timing of the proposed tax is unfortunate, with the County recently adding an additional half percent to the Occupational Tax rate, but he stressed there is a real possibility that the state will eliminate a program which provides matching funds to districts that adopt the nickel tax.

According to Kentucky Revised Statute 157.440, the adoption of the tax allows the District to participate in the Facility Support Program, which allows districts to receive additional funding for construction and repair projects. The amount of “equalization” money from the state is determined by a formula based on student population and income. The McCreary county School District could receive up to an additional $3 for every $1 generated from the tax.

Any funding generated from the additional levy would be restricted toward repair, renovation and construction of new facilities as well as debt service for construction projects. None of the revenues can be used toward salaries or other expenses.

Cash has stated local revenues generated from the additional nickel would be about $260,000 per year. With the state equalization an additional $750,000 would be generated from state funds, meaning about $1 million per year could be put toward construction.

The equalization will not come in immediately, however. It is possible that the District would only see up to half of the match for the first two years the tax is in place.

Opponents have questioned the spending priorities by the Board and if the tax dollars are being spent wisely. They have also questioned if the Board will levy more taxes in the coming years in addition to the nickel tax putting an increasing tax burden on the people of McCreary County.

Questions have arisen regarding persons qualifying for homestead exemptions. The Voice has confirmed that those that have the exemption will not have to pay for the tax as long as the value of their property does not exceed the exempted amount of $37,000. Properties valued higher than the exemption will only pay the tax on the value over and above the $37,000, not the full amount.

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