By John Mullen
GULF SHORES – City officials believe, based on a report compiled by the Public Affairs Research Council of Alabama, Gulf Shores would receive enough revenue to fund a city school system without new taxes.
On Monday, after an hour of presentations and public questions and comment, the city council voted 6-0 to begin the process of forming a school board. The overflow crowd erupted in a standing ovation.
Gulf Shores is the first breakaway city system in Baldwin County. Because there is no need to raise taxes, a vote of the people is not required.
Baldwin County Superintendent Eddie Tyler issued a statement questioning the budget projections in the PARCA report, saying the five-page report showed funding at a bare minimum.
“While I have hope, and I wish them well, I am also concerned for these families and their future education,” Tyler’s statement said.
Gulf Shores officials believe they have done their homework on funding.
“While the expense projections do not detail line item costs, they absolutely are factored in appropriate funding for administrative personnel, operations and maintenance and auxiliary services,” Economic Development Coordinator Blake Phelps said.
While the budget includes revenues from certain sales taxes levied in the county for education, Phelps said the PARCA study didn’t include any revenue from a controversial sales tax first levied in 1983. In 2007 when an island school was being considered, an attorney general’s opinion ruled that no city systems would be eligible to receive revenue from this source.
“Other legal experts believe it is a certainty that a city system would receive a pro rata/average daily membership share because of prevailing equal protection law,” Phelps said. “Regardless, any final decision will have to be worked out through the process and we felt it would be most responsible to exclude any revenues from the 1983 sales tax for (the PARCA report).”
On top of the revenues that would allow the city to start off “doing what the county is already doing, based on 2017 numbers,” Councilman Jason Dyken says the city could possibly use annual budget surpluses to raise academic excellence in city schools.
The plan to raise academic standards and achievement to higher standards, he said, could cost up to an additional $2.1 million.
“How are we going to fund that deficit if we as a city want the best schools in the state?” Dyken asked. “That’s how we looked at it. Can we afford that, does our city want that? And if our city wants that, can we do it and does it require us to go to a vote to raise additional funds to make that happen?
“If we want to do better, we feel like we have sources of revenue to cover that without raising taxes any further.”
Currently, the city has about $24.7 million in surplus, which equals about 70 percent of its annual budget. Dyken said city officials discovered that the bond rating of the city would not improve by having more than 70 percent of the operating budget in reserve.
“We went back to Moody’s and Standard and Poors and asked them what is the optimal number of reserves we need to get the best rating,” Dyken said. “They said 70 percent. If we went to 80 percent, 100 percent or 120 percent it would not improve our rating.”
Dyken says the money belongs to the citizens and using the annual surplus for education would be reinvesting it back into the community.
“It just so happens that the amounts we are putting into reserves every year cover the $2.1 million cost,” he said. “We get a better return on our investment.”
The PARCA report, Dyken said, is based completely on revenue for 2017, even when projecting school funding for future years.
“Our growth has been close to about 8 percent for the last 10 years,” he said. “We calculated our budgeting based on 0 percent growth in our revenue. We feel very comfortable and confident that we have been responsible from a financial standpoint for the city. We can take over the school as is and create a surplus and run it just as well. I feel like our school system will be in pretty good shape.”