Bowling Green City Schools will be out of money in 2025 without renewal of its income tax.
That was the message delivered by Treasurer Cathy Schuller at the school board’s May 18 meeting.
She presented her five-year forecast at the meeting.
The district’s cash balance is expected to be depleted from $16.73 million this fiscal year to negative $127,063 in fiscal year 2025 without the renewal of the income tax.
If that tax is renewed, $9.38 million will be available in fiscal year 2025, Schuller said.
“We were unsure what would happen with our income tax revenue going into the pandemic and everyone had to stay at home, no one was working,” she said. “We didn’t know what that was going to look like.”
In reality, that tax collection is slightly down for fiscal year 2021, but is bouncing back faster than expected, Schuller said, and the district saw a 4% loss in this area.
The 0.5% income tax, the only temporary levy left in the district, generated around $3.76 million this year, she said.
It expires at the end of 2022, and without its renewal, revenues from that tax will be gone in fiscal year 2024.
Also under revenue, Schuller has projected no new money into the forecast and operating revenue decreases by 1.4% each of the next five years.
Total revenues fall from $34.12 million this year to $31.80 million at the end of fiscal year 2025. The largest variables are pipeline, income tax and state funding revenues, she said.
The Rover pipeline has started its second appeal, asking for a 49% reduction in value, with the next hearing pushed to November.
Pipeline income is not used for general expenses but is put into a capital project fund.
Revenue is expected to drop to $31.80 million in fiscal year 2025 if the income tax is not renewed.
State funding, which was reduced in fiscal years 2020 and 2021, will bounce back to fiscal year 2019 levels next year before remaining flat for the next four years.
Eleven percent of the district’s revenue for this fiscal year’s budget of $34.10 million came from its income tax. Fifty-six percent came from property taxes.
Twenty-nine percent came from the state.
Expenses are expected by grow by 2.85% in future years, Schuller said, while revenues drop by around 1.42%.
It is normal to have personnel expenses being the largest portion of the budget, and that is at 76% this year.
Expenditures for this fiscal year are $32.03 million but are expected to grow to $36.60 million in fiscal year 2025.
The district will deficit spend about $461,353 this year and with increasing expenses and the potential for decreasing revenues, that amount mushrooms to $7.44 million in fiscal year 2025.
Deficit spending reduces the district’s cash balance, Schuller said.
“The forecast is based on how we operate today,” she said.
“Overall, the outlook for Bowling Green City Schools … we are in good financial condition,” she said. “We are experiencing a loss in revenues and expenditures continue to rise. Deficit spending is forecasted; however, it’s because of how we’re operating today.”
Board member Tracy Hovest asked if the income tax isn’t renewed, could the pipeline money be used to take up the slack.
Schuller said it is possible but reminded the board that the pipeline money is not reliable.