Supervisors in Pontotoc, Union and Lee counties will determine exactly how they will use the $300,000 each will get.
The payments are being made in-lieu of Toyota’s ad valorem taxes, as part of an agreement reached when Toyota located its new plant in Blue Springs.
The money is split evenly between the three counties in the PUL Alliance, which worked together to attract the automaker. It is to be used for education because it replaces tax money that would go to school districts.
This money is entirely separate from the $50 million gift Toyota agreed to provide to enhance education in the eight school districts in the PUL counties. Toyota is providing that money in $5 million installments over 10 years and was not obligated to do so. The plan is for it to establish an endowment to benefit all eight districts.
Meanwhile, supervisors will determine how the in-lieu-of tax money will be spent. Since the Toyota plant is located in Union County, it must first go through that county’s tax assessor and the PUL Alliance before it reaches the counties, likely in April.
According to the technical assistance division of the state auditor’s office, the boards of supervisors of the member counties can apportion the sum between school district purposes and all other county purposes.
Pontotoc County Supervisors President Wayne Stokes said he expects his district to divide the money between the Pontotoc City and Pontotoc County School Districts, based upon a per-pupil ratio.
“It is not set in concrete, but that is what we’re thinking right now,” he said.
Union County Supervisors President Danny Jordan said they are undecided about what to do with the money.
“We know it will be for schools, but we don’t know how,” he said.
Bobby Smith, president of the Lee County supervisors, also said the board had not yet decided how it would spend the money, other than that it would be for education.
“It covers a wide area,” he said. “It can cover anything from 4H to anything in schools. We’ll be looking at the needs and seeing where the need is and making sure we are good stewards of that money and that it goes where most effective.”
The executive director of Three Rivers Planning and Development District, which administers the PUL Alliance, said the money will not likely result in a big payment to school districts. That’s because much of it could be counted in a county’s tax base, Randy Kelley said.
“It won’t be a big surplus of money coming in every year,” he said.
When school districts create their budgets, they tell their local taxing authority how much money they will need. They are allowed to request up to 104 percent of the amount they received the previous year.
The taxing authority then takes that amount and looks at its tax base to determine how many tax mills it will take to get that amount.
With the extra money from Toyota increasing the tax base, Kelley said, it could make a mill more valuable and cause local taxpayers to be charged less money. But that means those school districts would not receive any extra money beyond what they request in their budgets.
“I really believe there has been some misconception that the schools would get $300,000 a year to do what they want with it,” Kelley said. “This is just going to increase the tax base like a new industry in the county would.”
There will be some gray area in the case of city or line school districts that do not normally receive tax money from the county, Kelley said. Those districts may receive extra money or no money. Supervisors also have some flexibility with this money, he said.
Each of the three counties has at least two school districts, a county one and a city one. Lee County has four school districts, including two line districts, Baldwyn and Nettleton.
HOW IT WORKS
State law allows companies with a capital investment greater than $100 million to reach an agreement to pay a determined sum in lieu of its ad valorem taxes for its first 10 years. That sum must be at least one-third of the company’s ad valorem levy.
In this case, Toyota agreed to a minimum payment of $3.4 million, a total that includes $2.5 million that will go to local governments to make bond payments related to Toyota improvements and $900,000 split between the three counties for educational purposes.
The money for education begins this year and lasts for 10 years. After that point, Toyota must pay its regular ad valorem taxes. The bond payments began last year and continue until the bonds are paid off in 2026.