County officials say CMS school bond request would require a hefty tax hike

Mecklenburg County officials say the Charlotte-Mecklenburg school board’s request for a $3 billion school bond would impose a hefty tax burden on the very families who stand to benefit the most from new and renovated schools. 

Members of the two boards, who have been working separately on plans for a November bond referendum, spent three hours Saturday sharing their information.

CMS officials say the 30 projects included in their $3 billion request are sorely needed to ease school crowding, replace outdated facilities and provide safe, healthy learning environments. Inflation has already swelled the price, and board members told county commissioners any delay would boost the cost further.

CMS board member Lenora Shipp summarized the CMS stance: “If not now, then when? And are our children worth it?”

County commissioner Leigh Altman said the answer to the second question “is unequivocally yes.”

But she cautioned that the county’s decision is not simple. School projects must compete with other county projects that benefit children, such as parks and greenways.

“We’re also balancing needs versus burdens that impact children, because we know that if we raise the tax rate, the more we raise the tax rate the more it’s going to disproportionately affect economically fragile people,” Altman said.

The costs pile up

That’s because this is a revaluation year, when the county updates the values for every property in Mecklenburg. It’s the first revaluation since 2019. Since then, real estate prices have exploded, especially in many close-in neighborhoods that used to be affordable and now attract people and corporations who can spend a lot for homes and land. It’s those lower-priced neighborhoods where real estate values have jumped the fastest, and that means rising property values will drive up taxes the most for owners of lower-priced homes.

When county officials put bonds up for a referendum, they’re essentially asking voters to approve a line of credit. The county borrows the money by issuing bonds in chunks as projects begin. David Boyd, the county’s chief financial officer, says that means taxpayers won’t feel the pinch immediately, but “there needs to be an acknowledgement and recognition that it’s not just a tax increase today. It’s tax increases in the future to be able to fund these projects as they continue.”

Boyd says $3 billion in CMS bonds would require a one-cent hike in the tax rate in 2025, rising to four cents by 2029. Four cents equates to an increase of just over $150 a year for the owner of a $384,000 home, which is the county’s new median value.

Boyd said the county is looking at putting up to $2.5 billion on the ballot for CMS — which would require the district to eliminate about a half-dozen of the 30 projects. The county is also considering roughly $1.5 billion in other capital projects for parks, libraries, jails, the courthouse and Central Piedmont Community College. When you add those, Boyd said a $2.5 billion school bond would drive a five-cent increase in 2029, and a $3 billion school bond would push the tax burden for capital projects to 6 cents.

An additional 6 cents would cost the median homeowner about $230 a year. And that’s before the county factors in growth in the operating budget for CMS and other county services — and before the city of Charlotte and towns set their tax rates.

Cut the CMS list?

Boyd said the only way to avoid a tax hike for CMS construction and renovation would be to cut the bond package to about $1 billion, which would only cover about 10 projects. That’s roughly the amount that Mecklenburg County voters approved for CMS in 2017, but back then, that covered 29 projects.

The county is responsible for setting the dollar amount that will be on the November ballot, but it’s up to the school board to decide which projects are covered with that money if voters say yes. County Commissioner Arthur Griffin asked CMS construction consultant Dennis LaCaria to rank them so commissioners could see what their cuts would eliminate.

“Are you willing to prioritize the 30 projects from 1 to 30?” Griffin pressed.

“So, they, they’re all of equivalent priority at this point,” LaCaria responded. Interim Superintendent Crystal Hill said if the county reduces the total, CMS will go back and figure out what to cut.

Other money pressures

Boyd said even borrowing $2 billion for CMS projects could push the county past the debt limits imposed by county policy. That could lead to the county’s bond rating being lowered, which would mean paying more interest for future projects, he said.

The largest school bond approved in North Carolina so far is $1.7 billion, which Guilford County voters approved last year.

Boyd noted that the state’s Local Government Commission has the final say on approving county bond debt. In the past, he said, approval has been routine. But he said Guilford County “got a significant amount of pushback” from the commission. The county met multiple times with the commission, he said, and won approval only after voters had approved the bonds.

Mecklenburg commissioners made no decisions Saturday. They plan to review all bond plans in April and vote for a budget in May. Chairman George Dunlap said he’s impressed by the work CMS has done, but there’s no guarantee the district will get what it’s asking for.

“The bottom line is, whatever decision we make is going to have tax implications that are going to affect this entire community. And we don’t take that lightly,” Dunlap said.

More information

See the CMS presentation here, the county presentation here or stream the meeting here.