published Tuesday, February 8th, 2011

The physics of politics

There must be a law of physics for politics which confirms that for every good civic action, there's a negative action of equal force. Perhaps that explains why the Chattanooga community has just been named one of the world's "Seven Most Intelligent Communities" at the same time that the County Commission is simultaneously seeking a way to cheat the Hamilton County school system budget out of $6 million in payments-in-lieu of property taxes for schools.

An "intelligent" community

The Seven Most Intelligent Communities designation recognizes Chattanooga's environmental and urban renaissance in recent decades and its pursuit of innovative technology to spur job creation. The latter owes especially to the EPB's fiber optic strategy, which has made Chattanooga the first city in the nation with Internet speeds of up to 1,000 megabites-per-second -- a gigabit -- available for every residential and commercial customer.

Ironically, the myopic County Commission voted last week to withhold the payments-in-lieu of taxes, known as PILOT funds, from the new Volkswagen plant and its adjacent supplier plants, pending a meeting with the school board next Monday.

The PILOT funds are derived from state and local tax abatement incentives used to help recruit selected new businesses. Agreements for such tax abatement allow these businesses to defer payments of property taxes, except for the portion of taxes that would otherwise go help fund public education.

These PILOT funds customarily go straight to the county school board as part of the portion of the countywide property tax base that is designated for schools. Regular school tax receipts and PILOT funds are virtually interchangeable and are treated under state law as regular designated school revenue from county property taxes, the assessment rates for which may not legally be reduced under the state's "maintenance of effort" mandate for consistent school funding.

Pilot fund tax grab

County commissioners, prompted by County Commissioner Fred Skillern and his political protégé on the county school board, Rhonda Thurman, had earlier suggested the idea of misappropriating the PILOT funds on the grounds that they didn't believe the school board would use the money wisely. They said they wanted the funds to be used specifically to finance bonds to build half-a-dozen new schools, never mind that school construction bonds are traditionally financed out of the county's general fund, which excludes property tax monies in the general school fund.

Both positions are breathtaking. School board members receive the school system's line-item budget and are free to question any item in the budget, and often do. As keepers of the county's purse-strings, moreover, they have usually rejected new tax funding for schools for purely political reasons. The majority of commissioners are now, for example, trying to use their budget power to leverage the ouster of the current schools superintendent, Jim Scales, just as they did to force the resignation of former superintendent Jesse Register, who subsequently was selected as metro Nashville's superintendent.

Beyond that, it is simply wrong for the County Commission to attempt to dictate to the school system how to use the PILOT funds, or any of the system's funds.

School construction bonds, in any case, are financed through the county general fund to avoid entanglement with the county's required base funding for schools under the state's "maintenance of effort" mandate. That standing precedent would probably provide grounds for a court to order the commission to release the new PILOT funds if the school board is forced by the county to take the issue to court.

Bad motive, bad method

So why would the County Commission vote (only Commissioner Greg Beck dissented) to withhold the new PILOT funds? The obvious answer is that most commissioners have been wrongly persuaded by Skillern to help coerce Scales' resignation. Skillern and Thurman have made that strategy plain with their increasingly mean-spirited public comments and insults about Scales and the school board. Their misguided strategy obviously seeks to undermine school board members who have been elected by the same voters and in the same districts as the county commissioners.

In fact, the County Commission has no legal say in how the school system operates. The state law that dictated the change to an elected school board intentionally eliminated the old system of appointment of school board members by county commissioners, along with the job patronage demands and management interference that some commissioners assumed came with that power.

Confused commissioners

The county commissioners who want to tell the school board how to do its job are not even clear on their own budget contribution. They have been claiming for months -- as Commissioner Warren Mackey repeated last week -- that the county budget for schools amounts to $370 million. In fact, the county funds just over half that sum for county schools.

The larger figure includes $126 million from the state and $52 million from the federal government, which simply route their school support payments through the county's finance and auditing departments. The bulk of the county's share comes from the property tax and PILOT funds (about $130 million), with the balance from the city-county sales tax split, school lunch payments and other indirect payments.

The commissioners' obstinacy and disingenuous misappropriation of new PILOT funds are embarrassing, myopic and wrong. They also work against schools needs and the larger trends that are bringing fruitful recognition of the community's positive growth.

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