Small school districts worry about revenue effect of Missouri sawmill bill
Sunday, March 13, 2011
A bill that would provide long-awaited tax relief for Missouri's sawmills would be a revenue drain on small school districts already hit hard by declining state and federal funding, according to a Southeast Missouri school administrator.
The legislation, sponsored by Rep. David Day, R-Dixon, would reclassify sawmills' assessed valuation at the agriculture rate of 12 percent of market value, down from 32 percent. The House last week overwhelmingly passed the bill, with proponents saying the change is long overdue for a struggling industry smarting from a sluggish economy and an anemic housing sector.
But Bleau Deckerd, superintendent of the Altenburg School District, said the legislation would cost his school system between $40,000 and $80,000 in property tax revenue if the rate is reduced to 12 percent. Deckerd said it may not sound like much to larger school districts, but the maximum amount of lost revenue would account for nearly 6 percent of Altenburg schools' $1.4 million budget.
The district's biggest industries are its sawmills, including the biggest sawmill in Southeast Missouri, East Perry Lumber Co. in Frohna, Mo. Deckerd said those businesses make up a sizable portion of the about $16 million in assessed valuation in the district. Total local property taxes generate about $550,000 revenue for the schools, he said.
"Nearly 50 percent of our funding comes from local revenue, between the tax base of personal property, agriculture property and commercial," he said.
The K-8 school district's enrollment this year totals 96 students, about 150 counting the high school students who attend schools in Perryville, Jackson and Oak Ridge. The enrollment figures have remained mostly steady in recent years, and those static numbers mean static state funding.
But early estimates show education spending cuts could be as steep as 10 percent next year, Deckerd said, although Gov. Jay Nixon has vowed to hold state education funding flat with the help of federal money.
"We're taking our hits, and we've tightened our belts. We just ask the lawmakers, 'Don't touch our local funding,'" Deckerd said. "If they start cutting those taxes as well, it's kind of like getting hit from all fronts."
But the sawmills are hurting, too, industry officials say.
Tommy Petzoldt, procurement manager at East Perry Lumber Co., said the tax reclassification would take some of the financial pressure off Missouri's small sawmills, many on the verge of extinction. For bigger mills, the lower rate would provide incentive for growth, he said. The company, in the "backyard" of Altenburg schools, employs 80 people, who support the community and its schools through consumer spending and property taxes.
"What we have to think about here is the viability issue, that there be a business in that local small town for all these parents to have a job, to keep this community viable," Petzoldt said. "But a lot of employees send their kids to that school, and we know it is a sensitive issue."
Sen. Jason Crowell, R-Cape Girardeau, said there is a balance to be struck in the debate.
"I think Altenburg's superintendent understands that if the sawmill closes, it's going to cost him far more" than the cost of the lower tax revenue.
Deckerd said he doesn't understand why sawmills should be classified as agriculture, calling the change a "slippery slope" that could theoretically lead to regulating industries like auto manufacturers as agricultural entities because they take steel from the earth to build cars. Sawmill operators argue the planting of trees for the production of wood is no different from farmers who harvest corn or soybeans.
Deckerd said he could live with the tax designation for sawmills, if it covered only the mill production end of business. He said he's concerned the tax change could involved other industry property, such as company vehicles and office supplies.
Crowell said Deckerd "raises legitimate concerns over the broadness" of the legislation's scope and that he will work to keep the bill focused on mill operations.
Kevin Dunn, superintendent of the Perry County School District in Perryville, said the proposed change wouldn't have a major effect on the tax rolls for larger school systems like his, which has a $22 million annual budget. While Dunn said he is sympathetic to small-business owners, he is concerned about the potential effect of the tax change on small school districts.
"These are tough economic times, and I would hate to see any school source of revenue decrease," he said.
The legislation has passed the House on numerous occasions over the past five years before dying in the Senate. Crowell said there's support in the Senate and Nixon has expressed his willingness to sign the right bill.
The superintendents "understand the legislation is moving forward and the train is out of station," Crowell said.
8432 Main St. Altenburg, MO
326 College St., Perryville, MO
7029 Main St, Frohna, MO, 63748