A Gaffney accountant determined Thursday the Cherokee County School District does not have a multimillion sales tax windfall it can use to balance a $56 million school budget approved earlier this week.

School district auditor Ben Kochenower confirmed the district can only transfer $1 million in 1-cent sales tax money to balance the school budget for the 2010-2011 school year. The money comes from extra sales tax revenue collected to make payments on a school building program approved in a 1994 voter referendum.

Bond payments are $3.9 million annually. The district is required to have at least 18 months in 1-cent sales tax on hand for bond payments.

The Cherokee County School District presently needs $5.8 million in 1-cent sales tax to meet the 18-month requirement, according to school district financial records. The district had $6.8 million in 1-cent sales tax revenue on hand in March of 2010.

While this sounds like a lot of money, Kochenower said the district’s 1-cent sales tax is a “sunshine tax” which will expire on June 30, 2016.

The district’s bond pay schedule shows a final payment of $3.951 million is due in 2017. Kochenower said this means the school district needs to bank an extra year’s worth of 1-cent sales tax revenue over a period of time so it will have enough money available to make the final bond payment.

The district issued the school construction bonds to build Gaffney High School, Limestone-Central, Grassy Pond and Northwest elementaries in the late 1990s. Renovations and additions were done at Blacksburg Primary, Corinth, Draytonville, Grassy Pond, Alma and Blacksburg elementaries. A Blacksburg High gym and the school district office were built with the bond money.

The 1994 local legislation creating the 1-cent sales tax in Cherokee County required any surplus revenue be used to lower the debt service millage paid by taxpayers. The district transferred $2.9 million into the school budget in 2009 based on a legal opinion from the McNair Law Firm in Columbia last March.

In the March 24, 2009 opinion, the law firm concluded the district could use surplus 1-cent sales tax revenue when the school district is operating a school budget deficit. The school district has received several state budget cuts in 2009 and 2010.

District figures showed a $3.3 million deficit in the new budget approved by school trustees Monday.

“In our view, the Board may vote by a 2/3 majority to increase the millage rate to cover the deficit the school district will experience in the current year,” attorney Francenia Heizer wrote in a March 24, 2009 opinion to finance director Ben Childs and former school superintendent Dr. Bill James.