As the Dothan City and Houston County school systems borrow money, they are encountering a problem – the pending death of the county’s one-cent sales tax.
Currently the county’s one-cent sales tax is set to expire after 2030, although a future extension would likely be instituted before the sunset clause takes effect. On Thursday, education officials requested the Houston County Commission support the removal of the clause since financial institutions are taking the rule into account when lending money to the Dothan City and Houston County school systems.
The systems receive 70 percent of the funds the tax generates and split the money based on student population, roughly a 60-40 split that favors the Dothan City Schools system, said Mark Culver, Houston County Commission chairman.
“It’s 5 to 7 percent of our budget,” Mike Manuel, DCS chief financial officer, said of the tax. “We just borrowed $15 million in a bond, and we were only able to borrow it for 11 years instead of 20 because of the sunset clause. That made the payments go up.”
“It has meant $8 million for us the last couple of years,” added David Sewell, Houston County Schools superintendent.
The sunset clause could also negatively affect the county government as it considers several projects to refurbish buildings and resurfacing roads, Culver said.
Legislators established the one-cent tax in 1986, revised it in 1989 and extended it in 2014, according to a county document. Culver said it seems repetitive to continually renew a tax that remains vital to education and county government funding.
Should commissioners support the education officials’ request during Monday’s meeting, the commission will draft legislation to pass along to local representatives, Culver said. Future commissions – if they should so choose – could draft legislation to strike down the tax if it were more permanently established, he added.