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Officials disagree on what tax district money should be spent on

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Franklin needs to reconstruct roads, build sidewalks and be prepared for a new factory to start up, not buy laptops for every high school student, the majority of city council members said.

A majority of city council members disagree with a decision made by a city board that oversees the spending of millions in tax dollars every year. Last week, the Franklin Redevelopment Commission approved spending $500,400 to buy a laptop for every Franklin Community High School student. That money will come out of the city’s tax-increment financing, or TIF, districts, which set aside some property taxes collected from businesses for economic development.

That money should be used to build new roads and sidewalks, improve drainage or help businesses expand, council member Joe Abban said. Purchasing a laptop that will be used for three or four years is the same as buying textbooks, which schools should be able to pay for themselves, he said.

Five of seven city council members think buying laptops for the school is outside the scope of how Franklin should be using the money from TIF districts. Infrastructure, such as roads and sewers, and promoting economic development, such as by helping a factory expand and add jobs, should be top priority, according to council members Abban, Ken Austin, Steve Hougland, Joe Ault and Steve Barnett.

City council members don’t approve how TIF funds are spent. The council appoints two members to the redevelopment commission board, which has the only say in how the money in TIF district is used. Council members could replace their appointments if they’re unhappy with how their two members are representing them, but no one is suggesting the current members be ousted.

The city has planned millions in road projects over the next four years, which will be paid for out of the city’s TIF funds. The Franklin school district is struggling because of its high debt, which was brought on by expansive building projects that are now taking away money from other uses such as technology, Abban said. And officials worry buying the laptops would set a precedent for the school to come to the city board whenever money is needed.

“This is not the right use,” Abban said. “The fact that the majority of the city council said no to this, what’s next? What’s coming next year that the school is going to want?”

The two council members who serve on the redevelopment commission, Rob Henderson and Richard Wertz, both voted to approve buying the laptops. The school district has been struggling with property tax caps and large debt payments when trying to afford new programs, such as this one. Schools are a factor in determining an area’s quality of life, and investing in better schools can lead to more people wanting to live and work in Franklin, Wertz said.

At a meeting before the redevelopment commission voted last week, Henderson asked the other council members for their opinions. Abban, Austin, Barnett and Hougland all said they didn’t think the laptops were the right use for tax dollars.

Henderson and Wertz said they considered those opinions but decided the project was worth funding after hearing two presentations from school officials, they said. School officials gave details about the funding crunch the school district is in, how laptops will help students get more experience with technology and how the school is investing its own tax money into the program over the long term.

“We did have some negative feedback, but I’m not sure that all the city council were afforded the luxury of having all of the information from the school with our two presentations,” Wertz said.

The laptops are the second school project funded by the redevelopment commission. The board also gave about $100,000 to Franklin schools to help pay for security upgrades at schools within the city limits. The security upgrades were smaller but went toward making a long-term upgrade to the schools, Abban and Austin said.

“Our responsibility is safety, and I can justify helping the police out and helping the schools out, so I think we can justify (security upgrades). Our responsibility is to bring growth in by economic development and new businesses and bring in new housing developments. But to do what we’re doing now, has put the RDC into education,” Abban said.

City council members also have concerns about whether the city will have enough TIF funding to keep up with other projects if the redevelopment commission continues to dole out large grants. The city will need to use about $5.9 million of its TIF funds by 2016 for road work on North Main Street and State Road 44. That amount doesn’t include smaller projects currently in consideration, such as redeveloping the former city hall.

The city also needs to save some tax money if a large business decides to locate to Franklin, Barnett said. For example, if a manufacturer wanted to open a plant bringing hundreds of jobs, Franklin needs to be prepared to help build roads, extend utilities or offer cash incentives, he said. The redevelopment commission can borrow money for a large project, but Barnett said he is strongly opposed to taking out loans.

He said he is OK with helping the school buy laptops because improving local schools is a top concern of residents. But he would have rather seen the city offer half the amount it did in order to save for upcoming projects.

The redevelopment commission gets about $3 million in tax dollars per year, and board member Jay Goad is working on a report showing how much the board plans to spend each year, which will show any points where the city would be running low on funds.

Council members also are concerned whether the laptop funding will encourage the school district to ask for more money if it can’t afford new projects. Henderson and Wertz both said future requests would be considered on their own merits.

The school district already gets the largest portion of taxes in Franklin, and by getting TIF money they’re now getting a second source of tax funds, Hougland said.

The school district overspent on new buildings, which drove up their debt, Abban said. After that, the state approved property tax caps, which limit how much governments can collect in property taxes. The school district has to pay debt first and therefore has less money for other projects and expenses, such as replacing buses or new technology. Other local governments, Franklin included, have had to cut and find creative ways to fund projects with less money, too, Abban said.

“The school is the biggest taxing entity, and this is like a tech bubble bursting. They built this big building. When you build something big, your payment is going to be big,” Abban said.

The school district’s debt limits what can be done with tax funds, but that was a problem that the schools, superintendent and school board inherited and couldn’t have prepared for, Wertz said. School officials have taken steps to save money wherever possible, and the city should help students because the TIF districts capture tax dollars that would otherwise go to the schools.

“I know it’s a little bit of a gray area, and it seems like it’s something that’s needed. Without it, Franklin is going to be a period of years before they could get it started. They cut teachers. They’re not doing the maintenance they should be. I can’t penalize the children of Franklin because of what happened with the caps and circuit breakers and referendum changes,” Wertz said.

A half-million dollars is a large amount, and the laptop request was outside the usual scope of infrastructure projects the redevelopment commission typically funds, Henderson said. But in the past the city also gave more than $5 million in TIF funds to start and fund the Franklin Development Corp., which doesn’t fit neatly inside the definition of how to use those funds either, he said.

“I hope it’s appreciated by the school system that they don’t come knocking every year. I do believe it was the right thing to do,” he said.

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