FLORENCE, S.C. – When he opened his property tax notice, Bill Phillips was surprised to find his bill had increased by approximately $200.
Phillips said he was surprised to learn about the increase and that several of his neighbors in the White Hall area were asking questions about why their taxes had increased.
The property tax increases mostly derive from an increase in the millage of Florence One Schools. The millage rate increased by approximately 11.4% from 238.6 mills in 2020 to 265.8 mills.
A mill, previously used to refer to 1/10th of one cent, is the rate at which real property, land and buildings, is taxed in the United States. Basically, the county determines the value of the property, applies an assessment ratio (either 4% for owner occupied or 6% for businesses) and then multiplies those numbers by the millage rate to get the amount of taxes owed.
The increase in the district's millage rate is due to a change in how the district borrows its 8% money.
Basically, South Carolina law affords school districts the ability to borrow up to 8% of the value of the property it owns. Typically, the borrowing takes place in the form of bonds.
Bonds are a fixed-income investment in which the borrower, in this case the school district, agrees to pay a set rate of interest over a period of time and the value of the bond at the end of the period. The date the value of the bonds has to be paid back is called the maturity date.
Richard O'Malley, the Florence One Schools superintendent, told the district's board in April that the district typically uses a four-year maturity date to pay back its 8% bonds. He added that the resolution approved by the board at the April meeting allows him the ability to change the maturity date of the bonds. O'Malley said he was going to exercise his authority to change the maturity date from four years to one year.
He told the board that changing the maturity date of the bonds will afford the district a chance to get ahead of its planned maintenance program.
The district implemented a planned maintenance program using its 8% money in 2019. The maintenance program includes the McClenaghan renovations, new football stadiums and upgrades to several schools. A full list of projects included in the plan is available at florence1builds.org/projects-list.
This allocation is made in addition to the use of fund balance to pay as the district goes on new schools such as Southside Middle School and the planned Williams Middle School.
O'Malley said the district had spent an estimated $16 million of the $46 million projected on the program but added that the renovations do not include roofing projects or heating, ventilating and air-conditioning projects. He said the district's needs include $21 million in roofing and $46 million in heating, ventilating and air-conditioning projects.
Thus, the total of additional maintenance projects remaining is approximately $97 million.
O'Malley added that the 8% money generates $12.4 million in revenue for the district, with $5 million of that going toward replacing the fund balance used for the pay-as-the-district-goes program and the remaining $7.4 million available for the maintenance program.
Assuming every penny of the $7.4 million was used for the maintenance program, it would take the district more than 13 years from now (15 years total) to complete its maintenance program.
O'Malley said by changing the maturity date of the bonds, the district can pay off its $12.4 million bond issue in one year, thus freeing $22 million next year to fund the maintenance program.
If all $22 million is used on the maintenance program, this would mean the district would have roughly $75 million in projects left to do. If the district continues with its allocations of $5 million for pay-as-it-goes and $7.4 million for maintenance, this would lower the number of years left on the project to a little more than 10 years.