Harlan Co. leaders told unmined mineral tax shortfall could cost district $303,000, forcing "difficult decisions" in next year's budget; issue compounds use of compensating tax rate

Harlan Daily Enterprise, Dec. 23, 2016

Schools bracing for tax reduction
Unmined mineral tax projected to lessen
Staff report

The Kentucky Revenue Cabinet has delivered news to school districts across the state’s coalfields that may lead to budgetary issues.

Superintendent Mike Howard reported to the Harlan County Board of Education last week that the district has been told to expect a shortfall of about $303,000 in unmined mineral taxes.

According to state reports, assessments on unmined minerals will be down drastically as a result of coal companies and mineral holding companies successfully appealing their assessments on unmined coal during a period of little demand for it.

Harlan County was hit hard on the assessments last year as well.

Nearby Letcher County has been told to expect a decline of $474,000 as a result of the assessment reduction.

Although funds don’t arrive until spring, Howard said the decline in assessments and an error on projection of taxes will force the district to take a very close look at next year’s budget.

“We are very likely going to have to make some difficult decisions,” he said. “We are working hard now to keep costs down, continuing the trend of doing more with less that educators have faced for about the past decade.”

News reports from other district’s board meetings indicate property tax rates will likely be impacted to offset the loss of unmined mineral funds.

The Harlan County board left tax rates unchanged this year, not taking the compensating rate due to the local economic conditions that have left many coal miners out of work. The compensating rate would have brought in an additional $275,000.

“We are looking at a loss of over a half million dollars,” said Howard. “This certainly has our attention and we are working daily to find new funding sources through grants as well as looking for ways to save and eliminate costs.”

In another item, the board accepted bids for an energy efficiency project at the Harlan County High School arena and the James A. Cawood High School gymnasium.

The bid was awarded to SE Lighting for projects to improve energy efficiency. The projects are funded in part by Kentucky Utilities through a grant targeting improved energy efficiency in schools.

Ceiling lights will be changed to LED lighting which will lead to a reduction in electrical usage and costs.

A $22,330 bid was accepted for Harlan County High School. The bid for James A. Cawood Elementary School was $23,375.

In other action, the board approved reciprocal, nonresident contractual agreements with Bell County, Leslie County, Letcher County and Pineville Independent for the 2017-2018 school year.

According to Brett Johnson, the district’s director of pupil personnel, the contracts will allow 32 students to be education in either Bell, 20 in Leslie, 46 in Letcher and any or all with Pineville Independent.

Pursuant to KRS 157.350, Kentucky law requires that districts include no non-resident pupils in its average daily attendance, except by written agreement with the district of the pupils’ legal residence, said Johnson.

Currently, Harlan County has one year contracts with Bell County, Leslie County, Letcher County, and Pineville Independent and a multi-year contract with Harlan Independent.

These contractual agreements allow the district educating the child to receive funding from the state based on their average daily attendance, he said.

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