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November 16, 2012

City reaffirms existing schools property tax for bond

With the Cullman City School board preparing to float a bond for a massive renovation project at Cullman High School, the city reaffirmed a long-standing property tax that will help the school system receive funding.

The city ratified the existing levy of 7.5 mill ad valorem school tax in the City of Cullman for the school system. No new tax was approved.

The tax has been in place since 1960, when it was passed by referendum vote with a 581-49 margin.

By ratifying the levy, it confirms the tax will remain for at least the next 30 years — the anticipated length of the city schools’ proposed bond.

“We did this at their request,” city council president Garlan Gudger, Jr. said. “It is not a new tax.”

Though the tax confirmation was needed to prove a stable source of long-term funding, the ad valorem tax will not be used to fund the bond’s debt service. Instead, officials plan to use new revenue generated by a county-wide half-cent sales tax that supports both the county and city school systems.

“To secure bonds, we have to pledge adequate tax revenue of at least 2-3 times our coverage,” city schools CFO Russell Raney explained. “In addition to showing the countywide half-cent sales tax, we also have to show our existing tax revenue.”

The half-cent tax is expected to generate approximately $850,000 per year, which should be enough to pay debt service on the proposed $19 million bond for the high school renovation as well as a handful of other capital needs that will be decided at a later date.

The project will revitalize the auditorium, cafeteria, old gymnasium and the J classroom building. A new L-shaped building will become the centerpiece of the campus, and replace the current offices and the A and B classroom buildings.

The project is expected to drastically increase square footage, razing approximately 53,000-square-feet of usable space and replacing it with 86,000-square feet.

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