Trustees voted unanimously to settle the dispute by offering to pay $16,500 in tax collection fees to the county for the 2009-10 budget year.
The figure is essentially based on a formula calculated on the amount of time and effort each employee at the Bee County Tax Assessor-Collector’s Office spends collecting taxes for BISD.
“We’re hoping this will extend that olive branch and that we can reach a resolution that stays in place for a number of years and that this (dispute) doesn’t have to be something that continues every year.” Trustee Velma Elizalde explained during Tuesday’s special-called meeting.
Board members said they believe the formula is fair to both parties, can be used to determine future tax collection costs and will prevent similar disputes in the future.
The county collects taxes for about 10 taxing entities, including the four school districts.
For many years, the county has charged BISD a 1 percent tax collection rate.
However, several years ago the county began charging a per parcel fee.
In August commissioners voted to increase the rate from $1.50 per parcel to $1.98 per parcel for all four school districts.
They based their decision on a study conducted by an ad hoc committee, whose two members were selected by the BISD and the county.
BISD believes it should be paying closer to $1 per parcel of property.
The trustees met behind closed doors for about two hours on Tuesday discussing the ongoing lawsuit. When they reappeared in open session, Elizalde made a motion to adopt the new formula.
She explained how the formula was derived.
• take the total tax office personnel costs — presently estimated to be $220,000 — and multiply it by the total amount of time employees spend collecting all taxes (50 percent of their time is apparently the total amount of time).
• Take the product of that calculation and multiply it by 15 percent, which is BISD’s share of the time tax personnel spend collecting taxes.
Mathematically, the formula would appear as such: $220,000 x 50 percent x 15 percent = $16,500.
The school district paid the county $19,000 last year when the tax collection rate was $1.50 per parcel.
However, Bee County commissioners asked for an additional $7,000 from BISD this year, and BISD was notified that the tax assessor-collector would not collect taxes for the school district at the lower amount.
Pettus, Pawnee and Skidmore-Tynan ISD also were asked to pay more for tax collection services this year.
“I’ve never heard of a county refusing to collect a school district’s taxes before,” San Antonio attorney Sara Leon told trustees Tuesday.
Leon is representing the school district in the dispute.
The county has hired Austin attorney Allison Bass.
BISD Superintendent Dr. John Hardwick Jr. said the school district was forced to take legal action after it was notified by the county that it would not collect its property taxes unless the district paid a higher collection service rate.
Hardwick said BISD had already adopted its budget and set its tax rate for the 2009-10 school year when commissioners voted Sept. 28 to increase the rate from $1.50 per parcel of property to $1.98.
A judge ordered both parties to enter into mediation in hopes of resolving the dispute.
If they cannot mediate the dispute, District Court Judge Joel Johnson has ordered them to seek a hearing to resolve the issue in court.
BISD and county leaders met in mediation last month but reached an impasse after about 10 hours of negotiating.
Commissioners met behind closed doors on Monday and after returning to open session voted to order their attorney to continue to negotiate with the school district in hopes of keeping the lawsuit out of the courtroom.
BISD trustees also said they want to keep the lawsuit from going to court.
They said they realize the impact it would have on taxpayers.
“There has been a lot of discussion in the community about the cost to the taxpayer,” Trustee Tom Beasley told his colleagues during Tuesday’s board meeting.
“It became fairly obvious to me fairly early in the process of studying this situation that the taxpayers of Bee County were paying too much to have their taxes collected, and I believe it has been the motivation of this school board since this issue came up.”
Although the county is only seeking an additional $7,000 or so this year to collect the school district’s taxes, Beasley said there is a larger amount at stake.
“There has been some comments about $7,000 being the issue,” he said. “No, $7,000 is not the issue. It’s a question of the actual costs vs. incremental costs — and I think any fair assessment of the actual costs over the last decade vs. incremental costs would show you somewhere between $500,000 and $1 million has been spent on collecting taxes that should have stayed in the taxpayers’ pockets. So this is not a small (amount). This is a big (amount). We understand that the county has budgetary restraints; we have budgetary restraints. This is really going back to the taxpayer and how much they are paying to have their taxes collected.”
Beasley labels BISD’s latest proposal as a “modified cost approach” because it takes into account the amount of time all tax personnel spend on tax collection duties, but leaves out the costs associated with the buildings, which the county would have to maintain even if it didn’t collect taxes for other entities.
“And, frankly, I suspect they’d have all their personnel there whether we were there or not, but it’s a balancing act,” he explained. “And so for the sake of the settlement and for the sake of serving the taxpayers’ interest, I think the formula makes sense. It allocates a factor for how much time the personnel spend on collecting just BISD’s taxes, and it allocates a participation factor on just how much time the tax office personnel spend collecting everyone’s taxes. And I think those are fair components. I think they are reasonable and I think it extends an offer to the county, which in the interest to the taxpayers should be accepted.”
Elizalde noted that BISD gladly paid $1.50 per parcel in years past, even though many other school districts across the state were paying closer to $1 per parcel.
Leon, who has represented upwards of 136 school districts statewide, agreed most school districts who pay per parcel for tax collection services pay closer to $1.
“So even when we were at $1.50 we were being very generous,” Elizalde said. “And I think that now, at the level where we are, we are still trying to extend an olive branch of sorts, hoping we can reach an agreement because I don’t think either entity wants to have litigation or have to do anything like having to open a tax office, open our own tax office.”
Trustee Matt Huie said the costs to BISD go beyond paying the county its rate.
“Over the past five years, because of this issue, BISD has had an attorney on retainer every year to try to resolve this issue,” he said. “My goal, and I believe I can speak for most of the board, is to try to come up with a permanent solution for this issue so we do not, in addition to paying the county to collect our taxes, we are not paying our attorney to battle the county to collect our taxes. So when we talk about how much it has cost us, it really has cost us a lot more than what we paid to have the county collect our taxes because we haven’t been able to get a resolution in place that everyone could agree on.”