BROOKSVILLE – The expression “Color of Money” is used to describe the situation where money has strings attached and can only be spent in certain ways. The way that the Hernando County School System raised money determines how it can be spent. Money collected through sales tax can only be used for capital expenses (e.g., facilities, buses, or technology). Money taxed through Impact Fees can only be used for new growth or paying off the debt created by building to support new growth. Money generated from the school system’s portion of property taxes or those that are distributed back to the area from the state can be used for all of the above plus operating the school system. These dollars which do not have strings attached can be used for anything make up the school system’s general fund.
This means that neither impact fees nor sales tax can be used to pay teachers. What could happen is that items that are currently paid for using the general fund could alternatively be paid for using sales tax revenues, freeing up the general fund to be spent on teachers. For instance, there are several schools that need new roofs and air conditioners. This could be paid with either general fund or sales taxes. School impact fees could be used to pay down the debt run up from building new schools.
It is necessary to understand what money raised with taxes can be spent on. State law limits how the money can be spent. These laws were passed to ensure that the money is spent according to the rationale for the specific tax. Impact fees are a tax on growth, so it is only allowed to be used to support growth. The sales tax is volatile and therefore should not be used for recurring expenses, so sales tax revenue can only be used to for capital expenses (i.e. one time purchases).
It is important to keep these distinctions in mind when discussing raising a tax. If your main goal is to provide money for school music and art programs sales tax and impact fees are not the most direct route. However, if your interest is facilities and technology then sales tax is a perfect fit. If your main concern is the debt the school system is carrying from building new schools, then you may be most interested in school impact fees.
Even if your interest is in a different area it is possible to use the money in one area to free up general funds that can be used somewhere else. The school system is planning on presenting a strategy on how to spend the taxes collected from the proposed sales tax. It is important to pay attention to the details of what they are doing and it may be necessary to look at the larger budget to explain what the school system is funding with the money collected.