Recallable nickel passes

At their regular June meeting, the Middlesboro Independent Board of Education passed a resolution which will impose an additional $.05 property tax. The tax was said to be earmarked to benefit the ongoing construction efforts of the district.

The BOE met to vote the recallable nickel at a special-called meeting on Friday — a time when several members of the public claimed to be inconvenient given the holiday weekend.

Despite the tax hearing and subsequent special-called meeting to vote on the recallable nickel being on the holiday weekend, there was standing room only as Middlesboro residents filled the middle school library to voice their concerns and hear details of the proposed tax.

First to speak was Joseph Nance. Nance is a representative of Ross, Sinclaire and Associates, LLC., a full-service investment banking, securities brokerage and asset management firm that serves as the district bonding agent.

Nance provided several handouts to those in attendance to explain the recallable nickel and how he believes it will help the Middlesboro School District.

First, Nance defined the recallable nickel as “… an additional equivalent tax rate not to exceed five cents per one hundred dollars of assessed value over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 for the previous school year that would be dedicated to major renovation of existing school facilities, new construction and debt service.”

Next he defined the compensating tax rate as ” … the tax rate that a school district would levy to produce the same revenue that it did the previous year.”

Nance explained that every year when any school district sets their tax rates they have two options. They can set the compensating tax rate or they can take a 4 percent increase. Nance said he researched the records and found that over the last decade, the board has chosen the compensating tax rate on eight occasions — a move he said shows the board has been hesitant to raise taxes.

Nance also explained that the recallable nickel is the only tax that a district can levy that will generate additional state revenue. He said all districts have to set aside a nickel’s worth of their existing tax base for a building fund and if the funds are raised in a manner other than the recallable nickel, they are not eligible for the state matching program.

Additionally, Nance clarified that the recallable nickel relates to real estate and personal property but does not apply to motor vehicles.

Bell County Circuit Court Judge Robert Costanzo was the first to sign in to speak. Costanzo made several points that had members of the crowd nodding their heads in agreement.

One of the main points Costanzo brought up was a 3 percent tax that Middlesboro residents have been paying since 1992. According to Costanzo and agreed by those in attendance, the tax went into effect to build the arts building. Constanzo said it was his understanding that in 2012, the board voted to keep the tax despite the bond for the building being paid in full.

Board member Kenny Pratt said he had questioned the issue and it was his understanding that the 3 percent tax was now put into the general fund due to state cutbacks.

Costanzo also asked for clarification on the tax rate and whether or not it would for sure be a tax rate of .05 or if that was dependant on other factors. Nance answered that the tax rate could vary depending on the collection rate of the taxes — if less than 100 percent of the taxes are collected the tax rate will increase slightly to compensate the difference.

The last person signed up to speak was the owner of a local radio station in Middlesboro. Brian O’Brien of The Big One 106.3 addressed the issue and asked for guidance as to how the community could go about voting on the issue.

Superintendent Steve Martin said he would be glad to help O’Brien and was willing to set up an appointment with him to do so.

The next Middlesboro Board of Education meeting will be July 21 at 7 p.m. in the Middlesboro Middle School Library.

Reach Reina P. Cunningham at 606-302-9091.

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