Anti-SPLOST tax impact calculations are wildly off the mark or exaggerated

Tue, 10/21/2008 - 3:26pm
By: Letters to the ...

Recently it was stated by one of the anti-SPLOST columnists that the E-SPLOST would require a contribution of nearly $700 per household per year over the next five years to meet the maximum collection of $115 million. Fortunately for the residents of Fayette County, that claim is wildly untrue.

For each household in Fayette County to contribute $700 a year they would need to have spent $70,000 each. According to the U.S. Census Bureau, in 2007, the median income for a household in Fayette County was approximately $77,000. For the entire household income to be subject to the E-SPLOST it would need to be an income tax and not a sales tax.

The median income of $77,000 above is the “gross pay” before taxes, 401k, medical benefits and such. If we want to calculate the effect of the E-SPLOST on a typical Fayette County family, we must also exclude, mortgage/rent payment, utility (gas/ water/ electric) payments, most internet purchases, and any other payment not currently subject to sales tax. Fayette County residents will pay E-SPLOST for Fayette County schools, only on purchases made within Fayette County.

It is important to know that the E-SPLOST is a 1 percent sales tax that only applies to taxable purchases in or deemed in Fayette County.

My family lives in Peachtree City and both my wife and I also work in Peachtree City. Therefore, nearly all of our purchases subject to sales tax will be subject to the Fayette County E-SPLOST if passed.

In a normal month we spend approximately $2,000 a month, between groceries, dining out, clothes, incidentals and other items. Our monthly average E-SPLOST would be approximately $20, which is a lot of money for anyone especially in these times.

Next we need to consider the property tax relief the Sullivan family will receive. Based on my 2008 property tax bill, the fair market value (FMV) of our home is $277,090 and thus the assessed value is $110,836 (277,090 x 40 percent). In the second year of the E-SPLOST, the millage for the school bonds should be reduced by about 1.45 mills. Thus, we will receive $160 in property tax relief for the year or approximately $13 a month. Therefore, the net cost for my family to ensure that our schools have the resources necessary to continue the great results that we expect is approximately $7 a month.

I noticed that the FMV of my home dropped slightly on my tax bills from 2007 to 2008. If the entire digest dropped by a similar .8 percent, the schools would lose nearly a million dollars in funding.

But a better question to me is how much would the FMV of our home drop if we did not have one of the best school systems in the state? Alternatively, how much of our home value is determined by having the BEST schools? I guess we could ask ourselves and our neighbors how many of us moved to Fayette County to benefit from the schools.

Although there are many assumptions and factors to consider when evaluating and predicting home value, I used a simple assumption in my analysis. I assigned a 1 percent factor to approximate the benefit of our schools over the five-year E-SPLOST period.

Whether my home goes up 1 percent over that time or has less of a decrease due to the current conditions, I figure that having the “Fayette Advantage” is worth 1 percent of what I paid for my home and what it is worth now.

Therefore, based on the current FMV of my home, I will receive approximately $2,700 in value or $45 a month during the E-SPLOST period for my approximately $7 a month investment, even if I did not have a child in the schools.

This analysis helped me decide that the Fayette County schools were worth investing in to ensure we retain the high quality schools we have come to expect.

Having excellent public schools benefits the entire community and is worth our investment.

Neil Sullivan

Co-Chair Fayette Citizens for Children

Peachtree City, Ga.

Neilsullivan72@gmail.com

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Submitted by Claude Y Paquin on Mon, 10/27/2008 - 10:02am.

If the SPLOST intended to bail out the school system raises the $115 million its supporters hope it will raise over five years, that represents, for a county with a population of 100,000 people, $1,150 per person.

That’s $230 per person per year. Considering an average household with three persons in it, that would be $690 per household per year.

Mr. Sullivan talks about a median household income of $77,000 in Fayette County, and of how his family spends only $2000 a month on taxable items.

If we had a county with only three households in it, making $30,000, $50,000 and $100,000 respectively, the median would be $50,000 (the figure in the middle), but the average (also called the mean) would be $60,000 (the sum of the incomes divided by the number of households).

People who have studied Statistics (as actuaries do) know there is often a large difference between the median and the mean. Yet, Mr. Sullivan jumped right on to his conclusions by treating the median income as if it was the average income.

It is interesting to think that when he has a good year and rakes in $35 million, Evander Holyfield raises the average income of Fayette County residents by $350, while the median income does not change by even one penny.

We have a lot of two-earner families in Fayette County, and a financial planner who makes $100,000 a year married to a school teacher who makes $50,000 would be earning $150,000, which is far from the median income of $77,000 Mr. Sullivan talks about.

Moreover, if the people who survey shopping center parking lots to check on out-of-county tags would look at the makes of the cars instead, they would see quite a few Lexus, Mercedes and Cadillac models out there, with price tags of $50,000 or thereabout. There’s a lot of sales tax potential right there.

In looking at his own expenses, Mr. Sullivan fails to mention any sales tax on any motor vehicle used in his family. Two-earner families generally have two cars, and sooner or later that triggers some sales tax.

Sales tax is not paid by individuals alone. When a business buys a motor vehicle, or when the office heat pump breaks down, some sales tax is paid. Much sales tax is paid by home builders, on construction materials, and then the cost is passed on to the buyer through the purchase price and resulting mortgage payments. Eventually, the sales tax burden trickles down to the public.

I have been careful not to say that households fork out $700 a piece per year for a SPLOST. But the real figure is a lot closer to $700 than the $240 Mr. Sullivan tries to convince us it is.

I appreciate the Nell Flanders type optimism Mr. Sullivan exhibits, and the Take Care admonition with which he concludes his letters. (Nell Flanders is Homer Simpson’s neighbor, in case you need the reminder.) His arguments have a nice fairytale flavor, but they don’t hold water.

Submitted by NeilSullivan on Mon, 11/03/2008 - 5:54pm.

Dear Mr. Paquin:
Thanks for the response but I will have to disagree with you. First, the median is the middle income and we agree on that as a fact provided by the census bureau. However the average is a different number for sure. For purposes of the “out of county calculator” we put on our website, we assume an average gross income of $90,000 for the 36,000+ Fayette household. There is no official statistic to determine that number so we may have different assumptions there. You talk of fairy tales but offer no support for your assumptions.

But part of the assumption base would be to eliminate “outliers” in the statistical base. Mr. Holyfield does well as do Reverend Dollar, and Tim Hudson of the Atlanta Braves; however, they are not the “average” Fayette Citizen. In fact we have a stratified sample set as we have one group that has two earners, one group with one earner, retired fixed income, and so on. Therefore getting to the truly average Fayette Citizen household can be a challenge. We can grasp at straws or we can pick something to use as a benchmark. I chose the median as the ONLY agreed upon statistic.

That is why I offered each person a way to determine their individual E-SPLOST impact. After starting at their gross income they must deduct the following to determine their own E-SPLOST impact.
• Income Tax
• Payroll Tax
• Benefit Payments
• 401k / retirement plan
• Alimony
• Money invested each month
• Flexible Spending taken from payroll
• Housing payment ( mortgage, rent)
• Utilities Payment
• Student Loan Payment
• Existing Car Payment
• Day Care Payment
• Medical Co-Payment
• Money spent outside of Fayette County – If it is in GA
you already pay E-SPLOST on that money!
• Money spent on the internet – Not usually taxed
= This equals money that may be subject to an E-SPLOST IF YOU SPEND IT IN FAYETTE COUNTY. When you compare the amount possibly subject to E-SPLOST divided by gross income what percentage did you come up with? Most people who have done this calculation come up with a ratio less than 40%. This provides another guide to estimate with. Without solid statistical data all we can do is estimate.

Now to be clear, I know Mumford called me a financial planner and I let that go, but I actually do corporate financial planning which is forecasting, budgeting, and analysis. My undergrad is in accounting and master’s is in taxation. I have made a career of working with budgets the size of FCBOE and larger. The numbers I presented where an illustration not absolute.

You are correct that cars are subject to the E-SPLOST. If you are leasing, the sales tax is based on the value of the lease and if you purchase the tax is based on the value of the car. Now there are some Mercedes around, but lots and lots of minivans which can run around $30,000 nicely equipped. The E-SPLOST for the minivan would be $300 which is $5/ month if you finance over 60 months which is your typical financial arrangement.

In closing Mr. Paquin I appreciate your comparison. I have enjoyed the Simpsons since they were part of the Tracey Ullman show. Ned Flanders is a man who believes in God and in helping his community, so I can live with that. I believe we can be positive and respectful while discussing our various positions on this issue.

In my career I have earned a reputation as a tough budget cutter who will develop and deliver the facts to make the necessary decisions. But I have always stood up for what I believe is right. I believe it is in the best interest of the county to decide to use an E-SPLOST like 175 of 178 school systems have already done to continue to fund the Fayette Advantage.

Have a Blessed Day
Neil Sullivan
Co-Chair Fayette Citizens for Children
www.yesfayetteESPLOST.org

The Crime Dog's picture
Submitted by The Crime Dog on Mon, 11/03/2008 - 9:23pm.

Funny how Claude's figures don't look at the value of his home over his x years of homeownership.

In six years, his home value has grown from $240K to $340K. Right now he pays no school taxes but when he taps a home equity loan or sells his house, he'll no doubt reap the benefits of our awesome schools!!!

Were a sales tax imposed, Claude would have to cough up a few hundred bucks a year. So his vested interest is in seeing the sales tax denied.

Fortunately there are a lot of other folks his age not so easily fooled. They sacrificed to educate their kids and they don't mind making sacrifices to help the next generation.

As much of a long shot it is, I sincerely hope voters approve the SPLOST for the furtherance of today's students, mine included!


Submitted by hi grover on Mon, 11/03/2008 - 9:57pm.

and that is really none of anyone's business. My wife, kids and I live in a great neighborhood with high homes prices and steady sales. My family is just leary of paying higher taxes that the current school board would be in charge of. Fayette County has had 8 years of this school board, and where did it get the County? You can't tell me the school board is the reason that our students do well. I think our students do well because they are motivated, they have wonderful teachers and parents that help the kids succeed. This school board has wasted tax payer money. I voted NO on SPLOST and my wife and I wrote in Nicole's name.

The Crime Dog's picture
Submitted by The Crime Dog on Mon, 11/03/2008 - 10:42pm.

If our schools maintain excellence, we will reap the property value benefits.

If the schools start to decline, you and I will pay the price.

I understand this type of advanced financial thinking may be beyond your means, but I guarantee you we have a bumper crop of kids at our local schools who could explain it to you!

Some of us would rather invest in our kids' future instead of in a bitter campaign that won't hurt the target of your ire (i.e. the FCBOE members).


Robert W. Morgan's picture
Submitted by Robert W. Morgan on Tue, 11/04/2008 - 6:42am.

The connection between good schools ad high property values is indisputable. One only has to look to our neighboring county Clayton and see what is happening there. Even without the mortgage mess, values were decreasing every year since 2003 and that was mostly because of the schools, the administrators, the school board and the voters some of whom were presumably parents of students.

The message - make some incorrect votes about the school system and you'll lose a lot more in property value than a few hundred dollars a year.

Nevertheless, the esplost needs to be defeated if only to teach our educators how to trim fat. Certainly Smola needs to go but a write-in is not going to work.


bad_ptc's picture
Submitted by bad_ptc on Tue, 11/04/2008 - 9:36am.

depending on whose study you choose read/believe.

As per the National Bureau of Economic Research, Schools spending raises property values
"Although potential district residents on average value additional state revenues, the authors find that "large school districts, and those areas with fewer homeowners and in areas in which residents are poor or less educated" are more likely to overspend.

Another paper on the subject questions, Do Good Schools or Good Neighbors Raise Property Values? seems to muddy the water ever more.

My personal belief is that good schools certainly don't hurt property values but statistically it's difficult to prove.


suggarfoot's picture
Submitted by suggarfoot on Tue, 11/04/2008 - 4:09am.

Crime Dogs 1st of many pro Smola post

"Tyrone citizens violated
The aristocracy may be out in Tyrone. Unfortunately they've been replaced by the idiotcracy.

They weren't even sworn into office before they broke their first campaign promises (open government, remember?).

At least the $500 simoleons will have to come out of their checkbooks and not campaign accounts.

Rabid anti-development ways will lead to property tax increases. Bank on it, Tyrone citizens. Just bend over and cough...


suggarfoot's picture
Submitted by suggarfoot on Tue, 11/04/2008 - 4:18am.

the above was a quote of Crime Dogs from the Citizen when Smola lost for Mayor. He thinks the Smolas are aristocracy and we are idiots.


suggarfoot's picture
Submitted by suggarfoot on Tue, 11/04/2008 - 4:11am.

you just seem to follow the Smola's careers from Tyrone to BOE like a little lap dog, or they would themselves.


Submitted by head_ragg on Mon, 11/03/2008 - 9:26pm.

it is about people who never should have been put in charge of money. Put someone in that is accountable and then we can talk.

The Crime Dog's picture
Submitted by The Crime Dog on Mon, 11/03/2008 - 10:29pm.

It IS about the kids. They will suffer during the budget crisis when media centers, arts, P.E., sports are cut/shrunk along with other electives such as auto shop that are needed for the kids who won't be going to college.

But you're really sticking it to Smola et al!!! NOT! The FCBOE members will not be any worse off personally because the eSPLOST failed.

They are accountable to the voters, BTW. Turns out they passed the accountability test in the primary. If File wins I'll support her but her hidden motives leave much to be desired.


Submitted by heatjam on Tue, 11/04/2008 - 6:51am.

If the BofE were really accountable to voters then why did they go along with the infamous 3 way plan for redistricting that you really pushed? It made no sense, was just warm and fuzzy and cowtowed to just a few voters - not what was best for the county at large. But hey, your children stayed in their little cocoon.

suggarfoot's picture
Submitted by suggarfoot on Mon, 10/27/2008 - 6:12pm.

everyone knows you know your stuff. The rest of us are fortunate that you gave us the benefits of your knowledge to help us make our own decisions. I respect you for that.

Everyone today was talking in line about they weren't going to vote SPLOST or the other goofy deal of letting the School Board spend money earmarked for our children on land redevelopment.


Submitted by truthandjustice on Sun, 10/26/2008 - 9:23pm.

Nicole might be a good candidate, don't really know. Do know that she is promising the same things that the candidates in the last Tyrone Mayor/Council election promised, uses the same tactics in campaigning, and has the same group supporting her including suggarfoot, Grace Caldwell, and others. They were successful in Tyrone and look at where Tyrone is now. If you can not give facts of why I should vote for you now and your only platfom is attacks on the existing board, do I really want to vote for you?

Submitted by head_ragg on Mon, 10/27/2008 - 5:43am.

you give yourself away, and dwell on the past. But since you brought it up, let me remind you some ran in Tyrone without a web site. They ran on their reputation of honesty and fairness. If there is not enough on Nicole's web site to please you, then may I sugguest you look at the two women's tract record.

Besides being honest and trustworthy, she has small children in the system. She has also stressed many times she is about accountablilty and using what we have wisely. She came to the debate ready to answer hard questions and sling a lot of them back at Smola but Smola's SPOLST people hogged the time so it never got to that. Some say Smola looked relieved.

mapleleaf's picture
Submitted by mapleleaf on Sun, 10/26/2008 - 8:12am.

Do you like the idea of trying to attract welfare recipients to Fayette County?

With each school kid costing about $9,000 a year to educate, including $4,500 of Fayette County taxpayer money, why would it be a good idea to make our county even more attractive to people with school-age children?

SPLOST proponents like Neil Sullivan argue that our real estate property values will go up with extra sales tax, because folks with school-age children will be more interested in moving to Fayette County.

Every family that brings us two kids to educate will cost Fayette taxpayers $9,000 a year to educate, while producing about $2,500 in school tax revenue. What kind of a deal is that?

Think about it.


suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 11:43am.

small children need small, neighborhood schools. So do their parents. As children get older, you can put them in larger,more far flung schools. But not while they are wee folk.

What is wrong with remodeling existing schools in populated areas? And as growth comes to the cow pastures, then put in the schools for them. Also, let the developers and their clients, {new homeowners], foot the bill.

The school I attended as a child was built in the 40s. When I was there, we had old water pipe heating. Today that school is still in use and is the best school in the county, and by far the prettiest. It has been remodelled many times and just gets prettier. Because the old site is used, all the money is lavished on the latest bells and whistles. I don't see anyone trashing Harvard, or Yale and rebuilding somewhere down the road in a cow pasture.

Building in empty cow pastures, away from populated areas does no good for our children, and no good for their parents. These schools seems to have been build with others priorities above ours.


suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 11:51am.

She is about being accountable for the taxpayers money and where and when the schools go in. She is about being a voice for us and accountable to us. Not about personalized email trees, that address each small groups wants, should they conflict with anothers!


The Crime Dog's picture
Submitted by The Crime Dog on Sun, 10/26/2008 - 3:51pm.

C'mon Suggarfot, you're the File supporter in chief out here.

Tell us why the SPLOST and Issues sections of her website are under construction!!!

She seems to have no answers for the future, only criticisms of the past. There are far more problems ahead of us than anything behind us.

Specifically what programs and personnel would she cut? Guess she's mum for fear of alienating voters, kind of like she's accusing the incumbents re the SPLOST vote.


suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 5:07pm.

a lot of answers out there soon. A lot you wish were never posted.


The Crime Dog's picture
Submitted by The Crime Dog on Sun, 10/26/2008 - 6:28pm.

If she can't update her own website, how can we depend on her to air the alleged BOE secrets?

Running out of time Suggar babe! Better get your candidate to step it up online, lest the rumor mill take over.


suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 6:53pm.

why don't you just run on along till your boss prints why she bought land for a elm, middle and high school, then sold the land for the high school to a developer who put a subdivsion on it? Why don't you just ask her why she then turned around and bough land down the road from a developer for a high school?


suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 7:50pm.

she is all busy with Nov 12 in Fayette county. To answer the charges of assault, attempted battery, filing a false police report and creating a false imprisonment.

Ms Smola and Mr Smola have retained Jonathan Wade as their defense lawyer.


suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 6:56pm.

she has those little personalized, specialized, emails for each of you. Someone is digging around on their old computer in the basement for one they have from about two years ago. Something about SPLOST and votes and having to go to Sandy Creek!


alittlebirdietoldme's picture
Submitted by alittlebirdietoldme on Sun, 10/26/2008 - 6:44pm.

drum up your smola support elsewhere, and your e-splost too.
you couldn't be any more obvious that you are closely tied into the FCBOE


Submitted by heatjam on Sun, 10/26/2008 - 6:35pm.

It really doesn't matter about what she posts online or what she says or doesn't say!!! ANYONE is better than who is in there now!

GO NICOLE!!

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