Thursday, March 24, 2011

Funding the bond with dollars taxed years ago

First, a point to consider: The debt fund is the fund that is evaluated by bond rating agencies. During the last levy campaign, the district claimed that rating agencies look at the general fund. Not true. They do look at the debt fund to make certain that the district has sufficient tax revenue in the current year for maturing bonds and interest. The concern is that an increase of taxpayers in default would leave the district with insufficient funds to make required payments. So the district needs to carry some balance. Some balance. Not $27 million.

What of the $12.2 million transfer from the building fund to the permanent improvement fund? Well it's moving into the debt fund -- according to the "2011 Preliminary Financing Plan" prepared by Baird -- in order to allow the district to claim that it is benefiting current taxpayers over future taxpayers..

This is all esoteric financing. Let's take a look at what is being advertised.

Olentangy for Kids makes this claim in response to its FAQ "How does a "no additional mill" bond levy work?"
This bond issue will be listed on the ballot as being for .50 mills. However, due to rapid growth, it will be collected at no additional mills.

This plan addresses growth while keeping our tax rates low. Current residents should see NO increase in their tax rate for school bonds, which results in future residents paying more than they would have under a “traditional” debt structure.

Structuring the bond debt in this fiscally responsible manner creates a situation in which future residents pay more of their fair share. Those already living in the district will see a much lower millage than they would have under traditional debt funding.
First off, relative rapid growth is history. Yes, the district is growing, but not at the same percentage as years past.

So the district is now unable to structure the upcoming issue in order to meet this claim -- the claim is a lie.

The district is using your tax dollars -- taxes you overpaid in previous years -- to offset what would have been in increase in bond mills.

Think of it this way: Last year the district taxed you at 10 mills. This year they only needed 9 mills but taxed you at the same 10 mills. Next year (should the levy pass) they will need 11 mills but will only tax you at 10, and they will offset the 11th mill with the mill you overpaid this year.

Debt isn't being pushed into the future so that incoming resident pay more. There is no "fair share" to be paid by new residents. You have already paid for a benefit that will be reaped by new residents. If you believe otherwise, you have been snookered by the board and administration.

So here is what the district plans to do: It will begin setting itself up for future levy (say 2014) that will increase your taxes. You will overpay -- pay more than what is required -- and the district will bank that money and then claim that it will run a "no additional mills" levy for the subsequent issue. But you will have already paid the additional mills.

You have overpaid the district $27 million dollars (almost a year's worth of total bond payments). And now it claims that it is going to keep your taxes flat -- as if it is doing you a favor.

The $12.2 million fund transfer is part of the ruse to bolster a claim that is nothing short of a lie.


Note: The report from Baird shows that a traditional levy would have averaged 5.91 mill to be paid. The "no additional mills" structure reduces the millage to an average of 5.87 mills. So the distict will save the taxpayer an average of .04 mills? Nope. In order to save us an average of .04 mills, we had to have already overpaid the district some $14 million dollars.

-- end series --


Anonymous said...

If bond levies start getting defeated will our taxes, then, go down?

Jim Fedako said...


Anonymous said...

But more from property value than millage.

Jim - I know you won't post this comment but it is true.

Jim Fedako said...

12:52 --

I haven't a clue what "But more from ... " means.

Anonymous said...

12:52 -- If bond levies are defeated, that means less buidlings are built, which means that we have less operating cost to fund. It's as simple as that. It has NOTHING TO DO WITH PROPERTY VALUES going down. Please educate yourself.