Spring-Ford to reimburse Glaxo $6.5 million in taxes

Posted: October 27, 2011

Montgomery County's Spring-Ford Area School District will have to pay pharmaceutical giant GlaxoSmithKline $6.5 million in tax reimbursements over the next three years under an agreement on a nearly four-year-old reassessment case brought by Glaxo.

The Upper Merion Area School District has also reached a tentative agreement in a similar tax dispute with Glaxo. The terms of that settlement are not yet public, district business manager Steve Skrocki said; they are scheduled to be presented to the school board on Nov. 7.

A court hearing on the Spring-Ford case was scheduled for early October; the two sides reached an agreement just before arguments were to start. The school board ratified the settlement Monday night.

Spring-Ford has to pay Glaxo $3 million sometime in the next 30 days and make up the difference by granting $3.5 million more in tax credits over the next three years.

The $3 million will come out of district capital reserves - money it had set aside in anticipation of school construction and repair projects - business manager Timothy Anspach said.

As a result of the new, lower assessment the district agreed to as part of the settlement, it will lose about $1.6 million in annual taxes from Glaxo, from $2.8 million to $1.2 million.

The new assessment amount is locked in for at least five years, giving the 7,800-student district some stability in the years ahead.

Anspach said that the district had decided not to go to trial because "we were afraid the judge would split the difference" between the two sides' proposed assessments, "and that would have been less than what we ended up with."

The district had been anticipating it would have to pay Glaxo more than $5 million, based on its settlement estimate.

Still, "it's a hard pill to swallow," Spring-Ford Superintendent David Goodin said. "We're paying money we've already spent - now, suddenly the money is gone."

Spring-Ford had already made some cuts this school year in anticipation of the settlement, Anspach said, shedding about 70 positions. Even so, it had to raise taxes by 3.23 percent and use about $4.5 million in savings to balance its $123.1 million budget.

The district still faces unresolved assessment challenges from other property owners, Anspach said; one of those, with the SEI Corp., could cost it as much as $900,000 more in taxes if it goes SEI's way.

With the settlement and another million dollars-plus coming out of the district's coffers, next year's budget will be difficult, Goodin said. "We're holding our breaths that we don't have to go that way again" and have to make additional cutbacks.

Contact staff writer Dan Hardy at 215-854-2612, dhardy@phillynews.com, or @DanInq on Twitter.

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