Covington school board’s nickel tax draws mixed reactions from the public

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Disagreement over Covington Independent Public Schools’ new nickel tax, which was approved in August, has spilled over into September, as evidenced by the mixed reactions of the public at a recent board of education meeting.

The tax passed by a 3-2 vote at a public hearing on Aug. 30. Board President Tom Haggard and Board Member Kareem Simpson cast the two no votes.

The hearing was characterized by disagreement among board members and district staff as well as confusion about what the taxes would fund. Many district staff hoped the money raised from the tax would go to improving air conditioning in Holmes High School and Middle School. However, this point of view confused several board members who said that plan hadn’t been clearly established. Pointed invective on all sides characterized the latter parts of the hearing.

Last week’s meeting, on the other hand, saw at least one board member, Hannah Edelen, publicly regret her vote and inquire as what power the board had in possibly reversing the tax. The public meanwhile was split on whether the tax was necessary with roughly equal numbers of speakers expressing approval and disapproval at the new nickel tax.

Dave Meyer speaks at the CIPS Board of Education meeting on Sept. 14, 2023. Photo by Nathan Granger | LINK nky

“Public schools are under attack right now,” said Dave Meyer, Covington resident and vice chair of the Kenton County Democrats. Meyer was the first resident to speak at the meeting.

Meyer did not talk about the tax explicitly but instead discussed various developments at the state level that he said imperiled Kentucky’s public schools. These included the potential for a pilot charter school in Kenton County, dwindling funding allocations to public schools as well as some of the region’s state legislators’ willingness to associate with controversial right wing groups.

“We need to fight back against that,” Meyer said. “And the best way, the most important way that we can fight back… has to start with governing well. We need to have this district get his act together in a way that is going to require dramatic change.”

Before considering the public comments related directly to the nickel tax, let’s first define some terms.

What’s a nickel tax?

A nickel tax is special kind of school-levied property tax designed to fund improvements and additions to school facilities. Although mechanisms for funding school improvements exist throughout the country, nickel taxes are peculiar to Kentucky.

Nickel taxes get their name from the amount of tax they levy in a local area, about five cents per $100 of property valuation (read LINK nky’s tax explainer for more information on how property valuation works). In practice, the tax ends up being a little more than five cents to make up for that fact that districts are rarely able to collect all of their tax bills.

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In spite of its name, Covington’s new nickel is only a partial nickel tax, according to the district’s Finance Director Annette Burtschy, equal to about 1.7 cents per $100 of property valuation.

Nickel taxes can only be used for building improvements, and new nickel taxes must be passed in order to fund new projects. The district already had one nickel tax in place, so any money raised from the new nickel would go into a separate fund by law.

Nickel taxes are useful to schools because they increase districts’ bonding potential.

What are bonds?

Bonds are a form of debt and are used frequently by not only schools but also municipalities. They’re an easy way to get cash quickly and have low interest payments compared to other forms of debt.

A school or other government institution will solicit investors to buy bonds, which the school then must pay back at a fixed interest rate over a predetermined period of time. The school or city can then use the money generated from investment to finance building improvements. Ludlow Independent Public Schools, for instance, approved the issuance of about $10 million in bonds last month to do just that. This means that investors will buy about $10 million in bonds–cash the district will receive–that Ludlow schools will eventually have to pay back at interest over the upcoming years.

Money brought in from nickel taxes make it much easier for a district to pay back the bonds because the tax draws in reliable cash payments from year to year, ensuring the district won’t default on its debt.

Covington Independent had contracted with Compass Municipal Advisors, a private consulting group, earlier this year to assess the different options for taxation. Compass’ analysis guided district staff’s recommendation for the nickel tax in August. According to Compass, the passage of a new nickel tax would double the district’s bonding potential to just under $45 million.

Recallable Nickels

The nickel tax approved last month is recallable. This means that, even though the board voted to institute the tax, the public can take steps to rescind the tax if they disapprove of it.

To do this, at least five citizens in the jurisdiction must form a committee to petition the county election board for a recall. Upon the formation of the committee, it must then solicit signatures from community members. The committee must collect either 5,000 signatures or 10% of the number of voters who participated in the most recent presidential election, whichever is less. Naturally, the number of people this percentage represents will vary depending on the voter turn-out of the area in question.

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The committee must then submit the petition to the county, which will certify–or strike down if the petition is inadequate–the results and add a measure to the next election’s ballot, asking people if they’re for or against the tax. Once the petition is successfully certified, the tax rate will revert to its previous rate until the community casts its votes.

Note that in this case, the county has already begun printing the ballots for the election in November, meaning that even if a petition to recall the nickel tax is submitted, the public would not be able to vote on the issue until next year’s election.

What did people think?

“If there exists a way to reconsider or rescind this tax increase, I strongly urge the members of this board to do so,” said James Toebbe, a Covington resident and graduate of Holmes High School.

Toebbe pointed out issues of poverty among the district’s residents and asked why the board had chosen to “further burden these families with additional financial hardships.”

In a conversation with LINK nky after the September meeting, Toebbe said he was particularly interested in the area’s elderly population, who often have fixed incomes.

James Toebbe speaks at the CIPS Board of Education meeting on Sept. 14, 2023. Photo by Nathan Granger | LINK nky

“Having attended the meeting on the 30th, it left me with the impression there’s no clear plan for allocating the additional revenue, but somehow it’s deemed necessary,” Toebbe said.

He concluded by saying that he’d already inquired with the county about the process for recalling the tax and invited the attendees at the meeting to collaborate on creating a petition.

Dan Francis, a local pastor who spoke at the public hearing in August, held the opposite view.

“The issue here is not a nickel tax,” Francis said. “The issue is will we choose as a district to provide for our Black and Hispanic students?”

“It is embarrassing to me that… we still haven’t air conditioned Holmes High School,” Francis went on to say, referencing the conversations from the public hearing.

Dan Francis speaks at the Sept. 14, 2023 CIPS Board of Education meeting. Photo by Nathan Granger | LINK nky

Moreover, Francis was skeptical of some of the board members’ criticism of Superintendent Alvin Garrison, going so far as to characterize the board as inexperienced.

“I’m concerned that we have a shorter-term tenured board who seemed to have an agenda about a longer term superintendent,” Francis said. “If I could guess, there’s agenda-driven issues going on here as opposed to a collaboration-driven agenda.”

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Francis wasn’t the only resident to speak out in support of Garrison.

“I pray today that [Garrison] won’t attempt to do evil for evil, but just continues to maintain a higher moral standard and do the thing that needs to be done to get this district where it needs to be,” Jerry Avery said.

Jerry Avery speaks at the CIPS Board of Education meeting on Sept. 14, 2023. Photo by Nathan Granger | LINK nky

Avery formerly sat on the board of education and had spoken out in support of the tax increase at the public hearing in August. He took issue with the way some of the board members had impugned Garrison’s actions when it came to facilities planning.

“You [Garrison] will come under attack,” Avery said. “But I just pray today that you will stand, continue to do what you were hired to do and let the chips fall where they fall.”

What’s next?

“After reflection, I don’t believe that that was the right vote,” said Board Member Edelen, referencing her yes vote from the public hearing. “Considering the evidence that’s been presented to us tonight, of how it will impact our communities as well as individuals that are organizing to recall this,… I’d like to make an ask to [President Haggard] to call a special board meeting to reconsider not the whole tax increase but the additional nickel.”

Board Attorney Mary Ann Stewart wasn’t sure if the board still had power to rescind, given that their votes were already cast. On the night of the meeting, Haggard said that he would confer with the attorney and other board members to see if something could be scheduled for the coming weeks.

Attorneys and county officials who spoke with LINK nky said that the board was constrained in its power to rescind the tax before a petition’s been submitted.

In a phone call with LINK nky this week, Haggard confirmed the board would not call a special meeting to consider rescinding the tax, in spite of Edelen’s comments. He said that the board would allow the public to take action if they chose and did not want to interfere with that process, at least not at this time. He corroborated what other sources said: there currently is no clear mechanism for the board to rescind the tax.

The next meeting of the Covington Independent Schools Board of Education will take place on Sept. 28 at 5:30 p.m. at the district’s central office on 7th Street.

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