The city of Martinsville has retained the services of Troutman Sanders law firm for potential litigation involved in the process of reverting from a city to a town and in its dispute with Henry County about reimbursement of capital expenditures the city made in a multimillion-dollar repair of a sewer line the county uses.
But at City Council’s meeting on Tuesday night, when a 5-0 vote put the city on course to revert, that firm presented the results of its study about reversion the city had solicited and outlined a course of action for the city.
This study included potential property-tax rate adjustments and an analysis of what might occur if the two school districts merge, which is a significant element of reversion. The report touched on several other issues that must be addressed by the two governments.
“We were not able to delve into the county side of things, but it [the study] does include them somewhat,” Stephen Piepgrass, an attorney with the firm, said in his presentation. “Reversion is a partial consolidation. It is typically used when the local tax burden becomes unreasonably high and the tax base is static.
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“A reversion [by the city] would result in a $31.7 million reduction. That amount would become the county’s responsibility.
“The county would need to increase its [property] tax rate — a 5-cent tax increase — and because the city resident will pay a county tax, the rest would be a wash.”
The current real estate tax rate for Henry County is 55.5 cents per $100 of assessed value. The rate for Martinsville is $1.0621 per $100 of assessed value.
“The town will still need a treasurer,” Piepgrass said. “Issues not yet covered include costs associated with the courthouse and jail.”
The courts and inmates would become the responsibility of Henry County, while Martinsville, as a town, would still own the jail property behind the municipal building and at the city farm and the court facilities inside the municipal building.
“What is really driving the reversion consideration is the schools,” Piepgrass said. “There is a significant decline in enrollment and [that] is projected to continue declining. The LCI [local composite index, state reimbursement for costs] isn’t doing Martinsville any favors. Funds are based on the number of students.”
Piepgrass went through a slide presentation showing student enrollment figures from 2012 to 2019.
“Fall enrollments for both localities have decreased, but Martinsville’s [declining enrollment has] been much more dramatic,” he said.
The charts presented show enrollment in Henry County schools relatively unchanged from 7,463 in 2012 to 7,455 in 2019, but Martinsville decreased from 2,317 to 1,942 during the same period.
The projections in 2025 show Henry County declining by only 23 students but that Martinsville’s enrollment would drop to 1,407, a loss of 535 students (more than 25%) in the next six years.
“Operating costs are higher in Martinsville than in Henry County,” Piepgrass said. “The teacher-to-student ratio in Henry County is 14 [students per teacher], and Martinsville was 11.6.
“Henry County is ranked 115 out of 134 localities in local contributions, while Martinsville is ranked 11 out of 134. Teachers are paid on a step-basis. The study recommends taking the highest step for each [school system] to make the process as easy as possible.”
Piepgrass suggested $1.4 million a year could be saved if the staffing ratio of a merged school system becomes the same as Henry County’s is now.
“We’re talking about jobs, and people’s lives, so this has to be considered,” he said. “If there is a merger, the LCI will make a $2 million shortfall.
“This is a first step. It’s a way of saying ‘this is happening,’ and then we would work with the county in anyway possible.”
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