While the defeat of statewide ballot proposal 15-1 garnered the most media attention following the May 5 election, voters in the now-dissolved Buena Vista School District rejected a millage renewal request for a re-purposed school operating tax to pay off the district’s operating debts. This was the second time voters rejected the millage request (November 2014). Failure to get voter authorization, again, raises the question of how the district’s debts will be satisfied.
The State of Michigan’s plan to address the operating debt of the dissolved district hit a snag in late 2014. That is when authorization for 18-mill non-homestead property tax expired. The tax was used to pay off part of the outstanding debt in 2014. According to officials at the Saginaw Intermediate School District, the remaining debt is approximately $725,000 (when the district was dissolved in the summer of 2013 the total deficit was estimated at $3.0 million). At the May 5 election, voters were asked to renew the millage for the 2015 tax year only in order to take care of the remaining debt.
With this second millage rejection and no time to seek another renewal vote before the summer tax levy, state officials are, again, faced with the challenge of finding the funds to retire the dissolved district’s debts. It appears that another legislative fix is in the works.
The Michigan Senate has taken action to address the remaining Buena Vista debt. In March, it passed a bill to appropriate state funds to repay the outstanding debt. The appropriation would be financed by an existing allocation of School Aid Fund dollars. According to the Senate Fiscal Agency, these funds are not needed for their original purpose and would lapse back to the School Aid Fund if unspent at the end of the fiscal year. Based on this assessment, the net cost to the state for paying off the debt is zero. The House of Representatives has not yet taken action on the bill.
If the bill becomes law, the long and winding saga of dissolving the Buena Vista School District and taking care of its debts will be closer to an end (Note: The Inkster Public Schools district was dissolved at the same time as Buena Vista; however, its debt millage does not expire for some time.) If, however, the legislature fails to pass the legislation dealing with Buena Vista’s debts, it is unknown where the funds will come from to retire the debt. Officials from the Michigan Department of Treasury have suggested that a judgement levy (a separate tax charged to all Buena Vista taxpayers) might be the only other alternative available. Time will tell.