The Dallas County School System is working to solve a $1 million sales tax debt problem. 

In an effort to benefit a school system suffering from financial woes, the Dallas County Commission approved a half-cent sales tax in December 2012 that was specifically intended for the Dallas County School System, county commission attorney John W. Kelly III said.

After more than a year of the county school system benefiting from the half-cent tax, auditors found that the tax was being inappropriately distributed, acting Selma City Schools Superintendent Larry DiChiara said during Thursday’s work session. The tax is applied across Dallas County, meaning that both the county and city school systems should benefit from the tax, auditors said.

As a result, at least $1 million dollars in sales tax revenue intended for Selma City Schools was never received.

“When the half-cent sales tax was passed it was done because the county school system was in dire financial circumstances,” Kelly said. “It wasn’t done for any reason to favor the county over the city.”

The Dallas County Commission doesn’t handle any of the money from the tax. It goes directly to the Dallas County School System and superintendent Don Willingham. The county commission solved the problem when Kelly sent a letter to Revenue Discovery Systems advising that the Selma City School System should be included in the resolution which would grant them future access to the half-cent sales tax revenue.

Dallas County officials said they weren’t so much concerned with future distribution, but rather what might happen to the nearly $1 million in revenue previously received by the county school system.

DiChiara said the Selma City School System would appreciate getting the money they were denied, but don’t want to harm the Dallas County School system in the process.

“What I shared with [Willingham] was that obviously we expect them to pay that to the school district, but we’re not going to do it in a way that’s going to hurt the children in Dallas County,” DiChiara said. “We’re going to do it in a way where we set up some kind of payment plan, and they will pay us the money that they should not have gotten.”

Willingham said in previous Times-Journal interviews that a reduction in state funding has put a financial strain on the county school system and Dallas County Probate Judge Kim Ballard said he was concerned about how retroactivity might affect county school system finances.

The issue isn’t quite solved yet.

Willingham said both systems are working to find a solution to the issue and he believes everything will soon be resolved.

“We discovered that the sales tax solution in the first week of May,” Willingham said. “Since that time, we have worked with the county commission, the state officers, and the State Department of Education about reaching the best solution for everybody. We’re getting closer.”

Ballard said that school boards must come to a decision before the county commission takes any action.

He said the commission could rescind the tax before another tax, specifically intended for the county schools, would have to be approved by Dallas County voters.

—Times-Journal staff writer Josh Bergeron contributed to this report