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County, school tax allocation reexamined
Cotten its official1 original
Justin Cotten

A financial windfall in local option sales tax may not make its way into the hands of Warren County Schools. 

Warren County commissioners are considering a change to how the county allocates money to the school system, a modification prompted by projections that indicate a sizeable increase in sales tax revenue. 

“I noticed a trend last year that we didn’t address,” said Finance Department director Justin Cotten. “Sales tax has been trending up drastically. We’ve had it budgeted for $8 million for the school system for the last four years. Last year, by the time we closed the books for 2020, they collected $9.6 million. That’s $1.6 million over. They are on course this year to hit $9.3 or $10.3 million depending on how the revenues have fallen with the state, as far as billing.”

If projections remain unchanged, the school system could receive $1.3 million to $2.3 million in additional sales tax revenue over the budgeted $8 million.

The school system also receives 62 cents of the county’s property tax revenue. Last year, that amounted to $4.8 million and brought the total allocation from both revenue streams to $13.3 million. 

Cotten presented that information to members of the county Budget and Finance Committee. He suggested commissioners consider increasing the budgeted sales tax revenue and decreasing the property tax revenue allocation by 16 cents, which amounts to $1.2 million.

“It would behoove of the county to reset those numbers to allow the county to use the property tax and allow the school system to continue to getting all the sales tax,” said Cotton. “The only sales taxes that the county collects that the school does not get is the small fee collected by the trustee, which goes to debt service. It’s only $300,000 versus $10 million. That’s the fee the trustee gets for dispersing the funds on behalf of the state.”

Commissioner Christy Ross asked, “If the sales tax collection falls off trend, do we have to make up the difference for maintenance of effort?”

“If we reset the budget,” said Cotten. “If we up the budget of sales tax this year to $9.3 and then something happens and they collect less, it would be on us to lower that sales tax number down and give them back that in property taxes. Their maintenance of effort is on total local contribution and not specific to any piece of local tax.”

While Budget and Finance Committee members agreed to consider a change to how it allocates money to the Warren County School System, no decision was made on the recommendation.