HILLSBORO - School officials here say they're rationing paper clips and going with older buses as they wait for a tax dispute to be resolved.

Hillsboro School District officials said teachers and students are struggling to get by because American Crystal Sugar Co. is protesting its taxes.

The school hasn't received $246,000 due in 2004 and the $283,000 due this year.

Two buses haven't been purchased as planned. And teachers have decided to forgo their scheduled contract negotiations until the matter is settled, school officials said.

"It's tough to negotiate anything when you don't know what's available," said Mark Rerick, a member of the teacher negotiating team.

Twice during this school year, the district has taken out short-term loans for cash-flow problems.

American Crystal's taxes are 8.5 percent of the $3 million school budget.

State law requires that disputed taxes be held in a special account. But the company also is asking for refunds for taxes payable in 2002 and 2003. The company says its taxes should be reduced by 80 percent for all four years.

Over the past four years, American Crystal has been assessed $1.67 million in taxes for its Hillsboro plant. If the courts agree with the company's valuation of its property, the school, county and township would share $330,000 instead.

Money withheld from Eldorado Township the past two years has totaled $30,000. That's half of the township's budget.

He said the result was that none of its roads were graveled this year.

Traill County has been without $320,000 over the past two years.

American Crystal is seeking similar tax relief for its plant in Drayton and its Minnesota plants in Moorhead, Crookston and East Grand Forks.