Tax-dollar mistake turns in city, schools favor

Daily Journal Staff Writer

Franklin schools, the city and other local governments will split nearly $1 million in tax dollars that had been incorrectly set aside for years.

Now, that money will go toward paying off debt for school buildings, city parks and other government services.

The windfall comes from an accounting error that was sending property taxes on equipment at Rexam PLC in Franklin to the city’s tax-increment financing (TIF) district funds. Those funds set aside designated tax dollars for infrastructure or economic development projects and don’t allow local governments to collect the money.

The issue was discovered in 2012, when the city hired Stephen Watson to review its TIF funding, but was not corrected after city officials asked. Earlier this year, when the city was preparing to borrow $15 million and pay it back with TIF funds, officials found the same problem was still happening and had not been corrected, Franklin Mayor Joe McGuinness said.

During that time, the money added up to more than $909,000.

Now, that money is going back to the local governments that should have received it. The two largest amounts are going to Franklin schools, which is getting more than $406,000, and the city of Franklin, with more than $390,000.

More than 70 percent of the school district’s refund will go toward paying off school debt, and more than $65,000 will go into the school district’s capital projects fund. Superintendent David Clendening said the school district most likely will use the additional funds to help with shortfalls due to property tax caps, which are keeping the schools from collecting about $2.6 million.

The city of Franklin will add $283,000 to its general fund, with another $52,000 heading to the parks and recreation department, according to a breakdown by the auditor’s office.

No organization has received the additional funding yet.

The Franklin Redevelopment Commission will meet this month to approve giving the money back to local governments.

The money being paid back was not set aside for other projects and is not needed to repay the money the city borrowed, McGuinness said.

By the numbers

Here’s a look at how much each entity will receive as a result of the taxing district mistake:

Franklin Community School Corp.: $406,324

City of Franklin: $390,036

Johnson County government: $86,723

Johnson County Public Library: $19,479

Franklin Township: $5,282

Johnson County Solid Waste Management District: $2,036

Total to be refunded: $909,882

SOURCE: Johnson County Auditor’s Office