Editor’s note: This story has been updated to correct the amount of Surry County’s proposed budget as of May.

Surry County supervisors have approved $12.8 million in school funding, despite disagreeing as to what rate to set for the county’s real estate tax.

The county has until June 30 to adopt a budget and set tax rates for the coming 2022-23 fiscal year.

Surry County Administrator Melissa Rollins had proposed a $56 million budget in May, recommending the real estate rate be lowered from the current 77 cents per $100 in assessed value to 75 cents in light of a sharp rise in home valuations. Rollins further proposed reducing Surry’s car tax from $4 to $3.75 per $100 for cars, trucks and motorcycles in light of a similar spike in used vehicle values.

As of June 6, she and Finance Director Carol Swindell said the real estate rate could be lowered another penny to 74 cents. But that still wasn’t enough for Supervisor Timothy Calhoun, who said he’s holding out 71 or 72 cents.

According to Rollins, 70 cents would yield the same real estate tax revenue as the current 77-cent rate, factoring in Surry’s most recent assessments. At a May 12 public hearing on the proposed tax rates, Surry residents reported seeing five- and six-figure increases in their home valuations.

Surry had adopted the 77-cent rate in 2021, up from Calhoun’s preferred 71-cent rate, to adjust for rising expenses coupled with a projected drop in revenues — most notably from a $710,000 reduction in public service taxes from Dominion Energy’s Surry nuclear power plant, which accounts for more than half the county’s annual revenue.

According to Rollins, it would take $321,000 in budget cuts to balance out cutting another penny from the real estate tax rate — between $642,000 and $963,000 to get to Calhoun’s preferred range.

Even though public service taxes are projected to go back up by $1.1 million this coming fiscal year, returning to a 71-cent tax rate would be “crippling” to Surry, Supervisor Robert Elliott argued.

“You cannot operate Surry County now like we did 25 years ago,” Elliott told Calhoun.

Chairwoman Judy Lyttle agreed with Elliott, and had been prepared to back him over Calhoun in a vote to adopt the budget as-is with the 74-cent rate. But state law requires a majority of the entire board of supervisors — not just the members present — to pass a budget. With one of the board’s five seats vacant and Supervisor Michael Drewry absent, the 2-1 split failed to carry.

The board did, however, vote unanimously to approve the $12.8 million earmarked in the proposed budget as the county’s local contribution to Surry County Public Schools after Superintendent Dr. Serbrenia Sims told the supervisors there were contracts sitting “on a desk in the school board office” waiting on their decision.

The local money, which accounts for more than half of SCPS’ total $20.7 million budget for the coming school year, amounts to an increase of more than $221,000, or 1.75%, over what Surry County contributed to its school system for the current school year. The school budget includes a state-mandated 5% raise for teachers and $750,000 to bring teachers who’d been subject to pay freezes in prior years up to the salary for their years of experience specified in the school system’s pay scale.

But Calhoun questioned whether a similar 5% raise included in Rollins’ proposed budget for non-school county employees was needed.

“I haven’t gotten that, and I work for a large company,” Calhoun said.

Surry could achieve additional savings, he argued, by hiring a part-time rather than full-time county attorney, closing one of Surry’s three schools in light of declining enrollment, and possibly selling the county-owned Gray’s Creek Marina.

Lyttle argues the marina has “been a plus for Surry County” and has brought in tourists, but Calhoun contends the rent the county receives from boaters “barely covers” its operating expenses.

Surry may or may not hold another budget work session ahead of its special June 16 meeting, where a final vote on the budget is scheduled unless the board opts to act sooner.