Be realistic about needs, NC treasurer says about $3 billion Charlotte schools proposal
State Treasurer Dale Folwell on Tuesday raised concerns about a Charlotte-Mecklenburg Schools proposal to build new facilities and whether county government can handle the amount of debt requested.
Folwell told The Charlotte Observer he hopes CMS and the county “look realistically at capital needs” when considering whether to ask voters to approve nearly $3 billion in borrowing for schools. He also asked whether the county has spent money from already-approved debt and if the CMS bond referendum will go before a “reasonable election and not a low-turnout election.”
“Three billion is the largest we’ve ever dealt with,” Folwell said. “That’s more debt than the (North Carolina state government) has outstanding in GO bonds.”
Folwell chairs the Local Government Commission, which OKs local government borrowing such as bonds and loans. He also told the Observer the commission will start “poking and probing at this” after voters have their say.
“We would highly recommend that the voters approve these bonds before they come before the Local Government Commission,” he said. “Let’s pour it through their filter.”
The Mecklenburg County Board of Commissioners could place a bond referendum on the November 2023 ballot, when it would appear alongside Charlotte City Council and town board elections. Odd-year elections typically produce lower voter turnout than even years like 2024 — when the presidential and gubernatorial races will appear on the ballot. But school bond referendums in Mecklenburg County have been held in odd-numbered years for at least the past three decades.
Folwell’s reaction adds to a cautious response from county officials during a joint meeting last week that centered on the $2.997 billion CMS says it needs to get students out of outdated school buildings. The county came to the meeting with a series of ideas to borrow less than the CMS-approved amount, which could result in a several-cent hike in taxes, according to its presentation.
Among the proposals: whittling down a similarly priced list of county department projects that include greenways, parks, libraries and the Latta Place redevelopment at the same time as the CMS bond referendum. The total of both CMS and county lists is $5.6 billion.
“I, as a county commissioner, am looking very much to what can our residents bear,” Commissioner Leigh Altman said during the presentation. “Many municipalities this year are needing to raise taxes. We’re going to have to look at how we’re going to ask the residents to pay for that.”
‘We have no choice’
CMS’ plan includes 30 projects, with most involving new school buildings on existing properties. It also includes three new middle schools and a west regional athletic complex. School officials trimmed from an initial list of 125 total projects with a price tag of more than $5 billion.
The $2.997 billion proposal, which must be approved by commissioners before appearing on the ballot, reflects prices adjusted for inflation through 2028, CMS officials say.
“We can’t afford to fall any further back when we talk about the needs of our buildings,” school board member Lenora Shipp told the Observer. “I’m hopeful we will get the full amount. We’re all taxpayers. We know this is needed. It’s about our children. Are our children worth this investment? I think we can all answer that with a yes.”
Laura Meier, a county commissioner, called the $3 billion a huge price tag. But she says the work to replace aging buildings will only get more expensive over time and aligns with commissioners’ priorities — specifically the goal of eliminating racial disparities.
“The state continues to disregard its responsibility of providing a quality public education for all children,” Meier said. “We have no choice. We have failed overall to provide safe, quality and adequately spacious buildings in which we are asking our teachers to teach and our kids to learn.”
Borrowing more than $2.5 billion not recommended
Mecklenburg County government agencies also have needs.
David Boyd, the county’s chief financial officer, presented its project list Saturday to both boards. That list includes 135 projects for courts, the sheriff’s office, parks and recreation, Central Piedmont Community College, libraries and greenways. It all carries a $2.6 billion price tag.
Boyd said the county’s top-end capacity includes $2.5 billion for CMS and $750 million for Mecklenburg County.
“The size of this even at $2.5 billion or $2 billion would make it the largest referendum (in the state,)” Boyd said.
Tax rate increases for a $2 billion or $2.5 billion CMS bond would be almost certain, with increases happening into 2031, he said. No tax increase would be needed for a $1 billion bond referendum. But it would mean CMS would be able to complete only 10 projects on its 30-project list.
With a $1 billion CMS bond, the county also could finish $1 billion in non-school projects — still without a tax increase — with half of them being pay-as-you go and the rest requiring debt.
“As a parent I want to say yes to all of it,” Altman said. “I am looking at it in the context of all these other financial burdens on our residents. I want to be sure we try to balance all of these urgent needs.”
CMS should poll community, Dunlap says
Commissioners are able to approve a lower bond amount for CMS than the $3 billion it requested. A vote is expected before summer.
Setting the borrowing amount to $2 billion or $2.5 billion might be a reason voters are more on board as opposed to the nearly $3 billion proposal, Board of County Commissioners Chairman George Dunlap said.
“(CMS) should do some sort of poll of the community about what amount is to be proposed,” Dunlap said. “It is still gonna be up to the citizens to determine at what amount they’re going to approve the bond package.”
School board members say they heard overwhelming support for the district’s proposal despite the costs. They approved the plan Feb. 28. A public hearing on the issue a few weeks earlier drew relatively few comments.
“This is not a want; this is a need,” CMS board member Lisa Cline said. “With the cost of construction escalating at such a rapid rate, I simply don’t see how we can afford not to fund the entire $2.9 billion request.”
Once the state reviews the CMS bond, Folwell said criteria will include determining if the proposed bond is necessary, the amount proposed is adequate and not excessive and the increase in taxes, if any, will not be excessive.
In a January update, CMS officials said the district is 74% finished with projects included in a 2017 bond referendum.
“Paying taxes for a healthy and educated society is not a misguided concept,” school board member Jennifer De La Jara said. “Wake believes in it. ... It’s also probably why Wake has invested $3.9 billion in quality schools over the past 22 years and Mecklenburg has only been able to invest $2.3 billion. We have a lot of catching up to do.”
Taxes going up anyway?
Even without a tax rate increase because of CMS bonds, some Mecklenburg County property owners will pay more.
County tax assessors revalue property as part of a routine practice to determine how the changing real estate market has affected values. Individual property owners could see the effects of the revaluation on their home values this year even if the tax rate decreases.
That’s due in large part to expected increases in assessed value from the last revaluation in 2019, according to county officials. Through October, the median value of real estate in Mecklenburg has increased 50% over the past four years, Mecklenburg County assessor Ken Joyner told Cornelius commissioners in November.
That includes a median increase of 57% of residential property and 39% in commercial property.
Dunlap said the nearly $3 billion bond package over 10 years could add four or more cents per $100 in value to the tax rate adopted this year. The current county property tax rate is 61.69 cents per $100 in valuation.
“I have to be able to calculate to know what it adds to the average house payments,” Dunlap said. “We’ve never increased taxes 5 cents for anything.”
This story was originally published March 8, 2023 at 6:00 AM.
CORRECTION: This story was updated to clarify the Mecklenburg County Board of Commissioners could choose to place the bond referendum on the 2023 ballot and that local school bond referendums typically have occurred in odd-numbered years.
