About the sales tax…

In this morning’s Oak Ridge Observer, guest columnist Trina Baughn referenced a post from this blog from April 14, 2006, regarding a gentleman’s agreement between the mayor of Oak Ridge (at that time, David Bradshaw) and the Anderson County mayor (at that time, Rex Lynch) about when or if the County planned to supersede the sales tax.

Unfortunately, she only told half the story.

That particular gentleman’s agreement was that the County would not do  so for at least five years.  Thus, when the financing was planned for the new Oak Ridge High School, the financial model assumed that Oak Ridge would continue to collect its share of the higher sales tax for five years, then that the County would supersede.   However, it was prudent to make a contingency plan in the event that the County didn’t hold up their end of the bargain, which indeed, they did not.

That contingency was, if the County superseded the sales tax rate before five years elapsed, that the school system would remit it’s portion of the new dollars from the County share of sales taxes to the City, to go toward bond repayment on the high school.  But only until the five year period was up, when the City had assumed they’d lose that money anyway.  This too, was a handshake deal — there was never a Board vote, nothing signed.

The schools held up their end of the arrangement, not only through the five years from the initial referendum in 2004, but several years beyond.  However, the time is well past due for the City to adhere to the original financial model, which assumed that the County would have superseded the tax rate anyway.

The schools’ attorney has advised that Oak Ridge Schools cease making these payments, and has been in communication with the City.  Because attorneys are involved, it would be unwise to go into the detail and links I would otherwise provide.   But our Superintenent, our Director of Business Services, and our former School Board Chairman, John Smith, all recall the facts exactly as stated here.

The school system held up our end of the agreement, and then some.  To continue making these large payments to the City would put the City at risk of running afoul of the State’s “maintenance of effort” law, and deprive our students of operational funds that the State has designated for the purpose of their education.

3 Responses to “About the sales tax…”

  1. on 06 Jan 2012 at 1:47 pm Harry

    It is incredible to me that hundreds of thousands of dollars in taxpayor money would be allocated between local governments on a gentlemens handshake agreement. It simply takes my breath away, if true.

  2. on 17 Feb 2012 at 9:21 am Harry

    I do believe that Keys has thrown you under the bus on the “handshake agreement.” it does seem to me that he is “losing it.” What do you think?


  3. […] his memory. He might also want to refer to his fellow board member’s recollection of events here and […]

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