Lowville Academy to hike spending, fund balance

LOWVILLE — With state aid and wind farm revenues projected to rise, Lowville Academy and Central School District's proposed budget would maintain a stable tax levy while increasing spending by 7.69 percent and likely boosting the district's fund balance.

Spending in the proposed 2008-09 budget is up $1.49 million, from $19,374,440 to $20,864,440. The tax levy, or amount to be raised by property taxes, would remain stable at $3,851,072.

While tax rates won't be determined until final town tax rolls are completed in August, district officials expect the full-value tax rate will decrease slightly from $10.02 per $1,000 of assessed value to less than $10.

The proposed budget projects $14,886,369 in state aid, up $1.66 million from this year, and about $2 million in revenues from the Maple Ridge Wind Farm, up from $1.1 million.

The school district in January received $3.57 million from the wind farm. Annual payments are based on a 15-year payment-in-lieu-of-taxes plan and a distribution agreement among involved taxing entities.

Much of the district's unbudgeted wind farm revenues have been put into a $3 million capital fund that will cover the local share of the district's $32.8 million Bicentennial Project.

However, all unbudgeted revenues from the next PILOT payment would go into the district's fund balance. And while this year's budget used $950,000 from the fund balance to reduce taxes, the proposed budget would use none.

District Superintendent Kenneth J. McAuliffe defended the decision to budget wind farm revenues well under the projected contractual amount as a conservative move, adding that the revenue-sharing agreement between PILOT partners may be changed within the next year.

"We're holding where we are until we have a chance to see how that develops," he said.

If the next payment is about $3.5 million, the district's unappropriated fund balance would be about the level of one PILOT payment, Mr. McAuliffe said.

A fund balance of $3.5 million would represent about 17 percent of the proposed budget, several times the state's recommended limit of 4 percent.

The idea of the move, discussed with auditors, would be to safeguard residents from an "overwhelming tax increase" if the wind farm were to go out of business, not to break state regulations, Mr. McAuliffe said.

District officials are working with the office of state Sen. Joseph A. Griffo, R-Rome, on possible legislation allowing the district to legally set aside money for long-term tax stabilization, he said. His concern is that when the turbines go on the tax rolls, the district's full assessed value would likely more than double, causing state aid to drop dramatically.

Another reason for keeping the tax levy stable, rather than reducing it, is that the annual payment amount for the next few years is now tied closely to current tax rates, Mr. McAuliffe said.

Since another tax decrease would reduce potential revenues for all PILOT partners, the group should devise a collective budgeting strategy before any entity significantly drops its tax rate, he said.

Rather than dropping taxes immediately and single-handedly lowering December's payment from the wind farm, district officials hope to soon begin meeting with the other taxing jurisdictions to reach a collective decision on the best way to utilize revenues and lessen residents' tax load, Mr. McAuliffe said.

"I think we can bring taxes down, but we'll have to do it together," Mr. McAuliffe said.

The previous PILOT provided more leeway to drop taxes without lowering future payments, but the agreement was changed late last year after it was learned that 75 turbines were not eligible for Empire Zone benefits. Under the old agreement, the lost benefits would have meant a drop in projected annual payments from $9 million to $7 million. Under the amended agreement, the wind farm in December made an $8.1 million payment.

District salaries and fringe benefits are slated to increase by $977,984, to $13.3 million. Of that increase, $300,000 is attributable to the proposed addition of a prekindergarten program and several other positions — including a speech pathologist, special education early intervention teacher, elementary teacher and noon monitor — that would return the district to 2002 staffing levels, Mr. McAuliffe said.

The tentative budget also projects increases of $213,152 for St. Lawrence-Lewis Board of Cooperative Educational Services programs, $103,026 for supplies and $101,500 for energy costs.

Budget sessions will be held Wednesday at the William Bush Library in Martinsburg, Thursday at the Watson Municipal Building, Monday in the elementary cafeteria and May 13 in the Castorland hall. The budget vote will be May 20.