Florida Supreme Court ruling could jeopardize new school construction
A recent Florida Supreme Court ruling could jeopardize how school districts pay for new construction. The ruling basically ruled it was unconstitutional for Escambia County to commit future property-tax revenues to paying off a road-widening project without a countywide referendum. The county wanted to use tax-increment financing to generate $135 million for the project. The Florida Supreme Court last week ruled the method unconstitutional, and the decision has agencies across Florida scrambling to get a better idea of how the ruling could affect future parks, neighborhood improvement plans, and schools. "This affects everybody and changes drastically the rule we've been operating under" since a 1990 case, says John Bowen, Manatee County school board attorney. School districts, in particular, have relied on different forms of bonds to finance the building or renovation of schools. In Manatee alone, the district issued more than $200 million in bonds in the past 11 years, according to records. Last school year, the district issued $88 million in bonds that comes with an estimated interest of $48.8 million, to pay for new school construction. According to Tim McGonegal, Manatee’s assistant superintendent of finances, some bonds are paid off with the ½-cent sales tax revenue, some with property-tax revenue. In fact, school district officials say they don’t think it will affect projects in the next five years, but are wary that it could lower the district's bond rating. "It's affecting our rating nationwide to be able to market (bonds) until we resolve this," says Mr. Bowen. In the coming months, organizations such as the Florida School Board Association and the Florida Association of Counties will be pushing for a rehearing or for the court to make the ruling clearer.
Bradenton Herald By Sylvia Lim
[Editor’s Note: The court reversed its decision in State v. School Board of Sarasota County, 561 So.2d 549 (Fla. 1990), that the Florida constitution does not require approval by referendum of bonds payable from ad valorem tax revenues. An ad valorem tax is one based on the value of property. The opinion is below.]
Strand v. Escambia County opinion