Already facing a $10.4 million budget gap for the 2011-12 school year, the Spring-Ford Area School District may soon have to pay out more than half that amount to the world's third-largest pharmaceutical company.
GlaxoSmithKline is appealing the valuation of its Upper Providence property over the last three years, and if the company prevails in the dispute, it will be entitled to about $5.5 million in overpaid taxes between 2008 and 2010.
"These figures...this is horrific. I mean, $5.5 million, we've got to cut a check...that's coming right out of [the budget]. We don't operate at a profit here," said board member David Shafer.
"When you add it all up, it's terrifying," Shafer said, referring to the potential impact of all the tax assessment disputes pending in the district.
District solicitor Marc Davis said the district continues to negotiate with the company, but that the sides remain "far apart."
"The matter will probably be tried [in court] sometime this year unless it can be resolved. We've continually tried to resolve it but to date have not made much progress in terms of a compromise," Davis said.
"If the taxpayer [i.e., GlaxoSmithKline] were to prevail at the [property valuation] number they're suggesting, we would owe them $5.5 million for those three years," Davis said.
A reduced assessment would continue to adversely impact the district's tax revenues in future years.
"Going forward, if they were to get their proposed assessment, it would certainly be in excess of $1 million per year [less] than what the district collects now," Davis said.
"We have a matter of significant impact to the district that is, frankly, hanging over our heads like an albatross," Davis said.
Board member Bernard Pettit asked Dr. Marsha Hurda, Spring-Ford superintendent, to prepare a briefing on the financial impact of the tax assessment disputes for on the district's budget crisis.
Speaking after the meeting, Davis said the district was dealing with "about 50 or 60" assessment disputes.
Hurda said that in addition to the impact of the revised assessments themselves, the process of adminstering the assessment appeals has strained district resources.
"It's also important to look at the big picture. What have assessments, as a whole, cost the district in the last year or two? It's a significant amount of money. You can certainly point at [GlaxoSmithKline], but when you look at all the appeals across the district, it's a huge chunk of money. It's commercial and residential. I think it's important for the community to see that amount, as well," Hurda said.
District business manager Tim Anspach said a similar dispute is pending with SEI, an international financial services company headquartered in Oaks.
Asked about the impact of residential assessment disputes versus commercial assessment disputes like those of GlaxoSmithKline and SEI, Anspach said the district usually does not aggressively contest disputed assessments unless the homeowner's proposed valuation figure is obviously unrealistic.
The school district's business office is projecting that a 7.6 percent tax hike will be necessary to close the gap between expenditures and revenues for the 2011-12 school year. Under Pennsylvania Act 1 of 2006, property taxes can only be raised by 1.4% for the 2011-12 budget year, but the school district can apply for a variety of exemptions that allow it to boost that number.
Even with the proposed increase, the district will still need to cut more than $4 million from the budget.
The at the district's 9th grade center.