Business Owners Backed First HHS

Dany Fleming’s open forum in the Daily News Record on 12/30.

“Such an emergency as this cannot be met by empty hurrahs … about the great values of our public education, but it will require real sacrifice. We cannot have schools without paying for them. But if we want better schools, if we want to [promote] the welfare of our own children, if we want to promote the [economic] growth of our city, we must be sufficiently unselfish to tell in unmistakable terms to those in authority that we are willing to stand for increased property assessment, increased taxation, or for whatever is necessary to give us, and to give us without delay, better school buildings for our children.”

1925 City Council presentation by Samuel Duke (JMU’s first president) representing Harrisonburg’s Chamber of Commerce. Harrisonburg was facing a dire school overcrowding crisis.

Duke continued:

“… if a flood should sweep away our reservoirs of water power on the river we would use emergency measures and repair the damage. Now every day large reservoirs of educational power are being swept out of the grasp of our children and the damage can never be repaired. We are jeopardizing the greatest powers that Harrisonburg of tomorrow can ever possess — moral and intellectual power.”

Harrisonburg was loaded with debt. However, business and civic leaders knew that Harrisonburg’s most valuable resource would be walking out the doors of Harrisonburg High School.

So, they threw a banquet “dedicated solely to the movement for better schools, including a new school with all the bells and whistles of a gymnasium, auditorium and laboratory space.”

A resolution passed: “The Chamber realizes there is a very vital connection between the general welfare and educational facilities of any community, and whereas there exists in our city a need for enlargement and improvement of our public schools … we pledge the membership to full cooperation with school authorities for the education of the young people of our city.”

Some public pushback claimed there were “too many frills in schools.” One DN-R letter declared “it’s a fallacy to try to educate everybody beyond elementary” and problem children were being dumped on schools.

However, in 1928, the first HHS opened. The attraction of new students necessitated the immediate building of three additional classrooms.

1925 Harrisonburg could be 2017 Harrisonburg … with an exception that local civic and business leaders were leading the way, trusting school leadership, and acting as partners and problem-solvers.

They weren’t willing to compromise our children’s education by cutting corners. Their bottom lines weren’t pitted against our school’s highest aspirations.

Their wise foresight has been Harrisonburg’s good fortune.

We’ve been a city of big ideas; of bold, practical and visionary leadership. Building a second high school is a big idea. We’re capable of it. We have tools to do it without burdening those with limited incomes and without delay. It requires the same vision, determination and cooperation that launched our first HHS; that laid the foundation for the Harrisonburg of today. Let’s make sure our children can say the same about this next high school decision.

HHS2 Affordability and Taxes, part 2

Taxes, taxes and more taxes How do our taxes compare to other cities?

Comparing taxes in different cities can be hard.  Cities can use different strategies to raise the same revenue and they have different economic and demographic realities. However, it’s still helpful to see how we stack up. So, below is a table with some different ways of viewing our comparative local property tax burden. Anyone with with other or contradictory numbers are welcome to contribute.

Generally, Harrisonburg compares well with other cities (we’ll use Charlottesville, Winchester, Staunton, Lynchburg, Manassas, Roanoke and Fredericksburg). Our median property tax amount is the lowest among this group. Less than half of Charlottesville and about a third of Manassas. And, while the median offers a good way to compare, most of these cities have generally higher property values which produce more revenue at the same rate. So, we can also take a look at how much we pay in property taxes as a percent of our income and as a percent of our property values. In every case, Harrisonburg residents pay less than any of those cities – by a fair amount.

That’s not our full tax picture, though. We should really be looking at our effective tax rate – meaning we need to include other city taxes we pay. One tax is the personal property tax. Harrisonburg’s personal property tax rate ($3.50 per $100 of assessed value) is lower than all the other cities but Staunton and Roanoke (by a small amount). So when factoring this tax, the difference in the lower rate Harrisonburg residents pay and the higher rate of other cities is even greater.

Again, this just gives us an idea of our capacity and should be combined with smart decisions.

When taxes go up won’t people and businesses leave the city if our property taxes increase again?

While tax increases affect us all, they do not always affect us all equally. We all pay the same tax rates for our services like water, electricity, trash collection and restaurants. In Virginia, however, property taxes offer a city the opportunity to provide tax relief to lower income residents, seniors and those with disabilities and veterans by putting caps on the % of income homeowners pay in property taxes or even tax deferments until a property is sold. Harrisonburg provides some tax relief for property and personal property taxes for qualifying residents. There are more tools for this that Harrisonburg can use, though.

As far as people and business leaving, there is no evidence  that shows property tax increases used to fund school construction causes a fleeing of people or businesses. The only evidence points to increased value in the city and residents and businesses staying put.

For Harrisonburg, the last property tax increase and a possible additional increase does not appear to have negatively affected the city or slowed the tide of people and companies moving into Harrisonburg. Actually, since the city’s last tax increase and start of discussions of a new HS, housing prices have increased, demand is high and supply is low. It appears people are moving in, not out.

Now what? What does this mean about building a new school?

This blog just addresses issues around taxes and affordability. It doesn’t address the cost and construction of a new school nor issues about our education system and priorities. Those will be taken up in the next blogs. However, trying to keep discussions focused on a topic at a time might be helpful and increase the chances we’ll find agreements.

So, the data and analysis seems to show that:

Harrisonburg’s credit is good and stable, even when taking into account borrowing significant money for a new school.

While raising taxes will be necessary with a new HS, our taxes still compare favorably with other similar cities, even with an increase.

Increasing property taxes for school construction can result in immediate increased home values that are greater than the costs and the city has tools to lessen the burden on lower income residents.

Increasing property taxes for school construction does not negatively affect the funding for other important city services or for school operations (teachers).

Increasing property taxes for school construction does not, and has not in the past in Harrisonburg, resulted in people and businesses leaving the city.

None of this suggests that building a new HS should be approached with anything other than a critical, informed and prudent approach.

HHS2 Affordability and Taxes, part 1

Yard signs and memes aren’t the basis for good decision-making; data, information and discussion are. We should all want as complete and accurate a picture as possible, since it’s our money being spent. So, let’s take a look at some numbers related to Harrisonburg’s taxes and potential capacity to fund a new high school.

First, before we begin, this information is aggregate data for Harrisonburg. It’s not meant to imply anyone’s personal financial situation or ability to handle tax increases. Second, keeping taxes as low as possible is the goal for which we all agree – just as long as we properly fund our city services and programs, which is where many disagreements begin. Lastly, certainly there’s more data for people to add to this discussion. Some of it may contradict or be corrections to what’s here; that’s welcome and constructive, as long as you can show a credible source (which doesn’t mean “I heard that” or “I just know we’re going bankrupt”). Remember, this is just about the funding issues, not the construction nor education issues.

Credit and borrowing

The city just can’t afford a 17¢ tax increase. I hear that borrowing for a HS will cause our credit rating to drop.

Currently, Harrisonburg has an ‘Aa’ credit rating and the credit agencies view it as steady. (Davenport and Company analysis for Harrisonburg) That’s good and not many cities have higher ratings. It reflects a history of good financial management and responsible city operations (schools, water, parks, streets, etc). It means the city can issue a bond (borrow money) at a good interest rate. In receiving that rating, the credit agencies acknowledge the city’s need for additional money for school facilities and determined that borrowing up to $100m by 2019 and $160m by 2021 would be “manageable” for the city. Even with that potential borrowing, the agencies also went as far to suggest our rating could increase if our local economy sees the same steady increases as our peer cities. It could also decrease with mismanagement, but that’s not our history. The speculation that our city can’t afford that tax increase does not seem to be shared by the experts.

It should be noted that the 17¢ increase is based on a conservative estimate for Harrisonburg from more than a year ago. It’s certainly wise to budget using conservative estimates. However, interest rates for city borrowing change over time. Currently, it looks like the city might be able to borrow at a rate around 25% less (3% vs 4%). However, as I’m not a city bond expert, I welcome any corrections to that.

This is not a recommendation or endorsement for maxing out the city “credit card” or for making anything but the wisest possible education investments. What we can borrow is not the same as what we should or need to borrow. Whatever we borrow, we owe back, with interest. However, it’s more important to understand context than to just follow rhetoric.

Investments

Education funding is not just spending; it’s actually an investment. It’s considered one of the best investments a community can make. (National Bureau of Economic Research report on Value of School Facilities) Of course, it’s how you spend that determines a good investment, not how much you spend. And, spending on education includes many things from teachers to textbooks to facilities.

So, what’s the benefit of spending on education facilities? From the research that’s available, the financial gain for individual homeowners from educational facilities investments far outweighs the costs, and the effect is immediate and lasts. Additionally, the research shows possible academic achievement gains from new facilities, resulting from reduced overcrowding, less student and teacher absences and a healthier learning environment. The verdict may still be out on some of this, but there doesn’t appear to be research pointing to education facilities investment being anything other than beneficial to students, local economies and residents.

Of course, another benefit of investing in needed school construction is that, during the years of construction, it provides a solid boost to the local economy through well-paying jobs for the construction and related activities

One last important note. Investment in new school facilities does not cause a drop in funding for regular school operations (teachers, text books, etc) nor harm educational achievement in a district. It’s likely to support educational gains. Also, nothing (that I’ve found) shows that it has a negative impact on future funding of other city services (i.e., law enforcement, fire and rescue or school operations – which would include teacher salary raises). If anyone has contrary information to offer on this (other than their hunch), it would be welcome.

The proposition is not students or facilities. It’s not facilities or other city services.