JOHNSON CITY, Tenn. (WJHL) — A major school construction project is back in Johnson City’s sights — several years after a school funding maneuver by Washington County increased the degree of difficulty — but now Towne Acres Elementary won’t get replaced without a tax increase.
“With the additional growth that we see in our community, with the requested annexations that are occurring in the north end of the city, it’s paramount that we have room at Towne Acres to take additional elementary students, and we’re going to communicate that,” Johnson City School Superintendent Steve Barnett told News Channel 11.
Johnson City City Manager Cathy Ball said city commissioners and Johnson City Board of Education members are discussing various paths toward funding what is expected to be a $40 million project. News Channel 11 reported on talks about a new school when they first emerged publicly at a March 23 Johnson City Commission workshop.
Early estimates are that a new 700-student school would cost the city in the neighborhood of $3 million annually over 20 years. That’s $3 million the city doesn’t currently have in its revenue stream and that would require about a 14 to 15-cent property tax increase if no other funding sources were tapped.
A 15-cent increase would add $75 a year to the property tax bill of a Johnson City homeowner with a house appraised for tax purposes at $200,000. Johnson City’s current property tax rate is $1.73 per $100 of assessed value, while Bristol, Tenn.’s and Kingsport’s both are $1.99.
Barnett hopes city commissioners will try and reach a funding solution during this year’s budget cycle, which continues through June before the 2024 fiscal year begins July 1.
“We’d love to see that happen with plans for the school starting next next fiscal year,” Barnett said, adding that such a timeline could conceivably result in a new school being open by the 2027-28 school year.
“It definitely does need to happen as soon as possible,” Barnett said. “We’re out of space at Towne Acres. The administration, teachers and parents in that community and the students have done a great job making it work… but that can only last so long.
“At some point they’ll be out of space and we need this to occur before that happens… We can’t just rezone our way out of this problem.”
The story could have been different: The Jonesborough Wrinkle
Flash back three and a half years and the city’s message about schools wasn’t much different — replacing its oldest elementary school was the most expensive among a slate of capital needs Johnson City’s schools faced.
But there was a major difference. Washington County was getting to build a new Jonesborough Elementary that traditionally would have netted the city school system more than $30 million for its own capital needs.
Leaders didn’t know whether the city schools would get all, some or none of the shared capital funding that traditionally comes when a county school system borrows money for a new school.
Under Tennessee state law, counties with separately run city school systems must borrow enough to give a proportionate share to the city system(s), based on pupil enrollment. In the case of Washington County and Johnson City, the split is nearly even, so $35 million borrowed for county schools would have required an additional $32 million or so to be shared to the city.
Had that occurred, Washington County likely would have had to raise property taxes — though by less than Johnson City probably will — and “we as Washington County taxpayers would of course be helping to fund both schools,” Barnett said.
The county found a loophole as the Town of Jonesborough, which doesn’t have its own school system, became the borrower for the new school with the county reimbursing the town and leasing its own school. The county agreed to pay the city schools $500,000 a year for 20 years — less than a third of the traditional amount, and not up front.
So Johnson City used money it did have to add 20 elementary school classrooms at three schools and accomplish some other capital needs without the need to enlarge the public purse.
“We knew that it was going to be a short-term fix,” Barnett said.
“The money that we’ve had over the last few years, I feel like we’ve been really good stewards with that funding,” he added. He said the new classrooms, which allowed the city to move fifth grade back to elementary and create more room for sixth-eighth grade by making Liberty Bell and Indian Trail separate middle schools.
“We added that capacity without adding the administrative overhead, what it takes to buy property, do plans and build a brand new school,” Barnett said.
But over the last three years, not only did Towne Acres’ age and structural limitations persist, the city kept growing. At the March 23 workshop, city commissioners heard what they probably already knew — even with 20 more elementary classrooms than it had in 2020, the city faces a capacity squeeze on top of Towne Acres’ other drawbacks.
What’s clear is that adding debt service to current revenues —either the general fund or to the sales tax-funded “People’s Education Plan” — which brings in about $2 million annually from a 1/4% sales tax dedicated to schools — aren’t options right now.
“We are limited at this point in time to any of those funds being freed up through paying off debt until 2035 and we know we can’t wait that long,” Ball told News Channel 11.
Johnson City has one option that would reduce any property tax impact. The PEP money traces its roots back to a referendum in the 1990s that raised the local sales tax rate to 2.5% and earmarked the funds for education-related projects.
Counties in Tennessee can charge a maximum of 2.75%, and local officials discussed the possibility of a quarter-percent hike in 2011. That proposal went down to defeat, and the possibility has been mooted at least twice since, in 2018 and 2020.
“That would generate about $2 million, which still doesn’t end up being enough in and of itself to pay for a new school,” Ball said.
“We’re having discussions about it,” Ball said of the sales tax option. “We are looking at all potential revenue sources.”
The envisioned project would create a new, 700-student K-5 school on the north Johnson City land where the 50-year-old, 420-student Towne Acres sits today. Barnett said there’s enough land on site that the current building could stay open while new construction occurs.
Higher interest rates mean a 20-year loan term will cost the city about half a million more a year than it would have a couple years ago, when Johnson City leaders already knew they needed a replacement school.
Barnett doesn’t seem overly nervous about what will happen as leaders consider the need over the next few months. He said the school board will support commissioners as they work together to explain the need to the public.
“One of the things that I appreciate about our community is that we look at education as an investment in current students, an investment in our future students and the future of our community,” he said.
“I think by and large, you will have a community that understands and feels strongly that we need to make sure that we do this investment in our students.”