Thursday, September 26, 2013

Education bonds: Tax or no tax?

"No tax increase"  is one of the first things you'll hear from supporters of the bonds for Charlotte-Mecklenburg Schools and Central Piedmont Community College.

But when you see a ballot, you'll find this wording:

“SHALL the order authorizing $290,000,000 of bonds secured by a pledge of the faith and credit of the County of Mecklenburg to pay capital costs of providing school facilities, including the acquisition and construction of new school facilities, the improvement and expansion of existing school facilities and the acquisition and installation of furnishings and equipment and the acquisition of interests in real property required therefor, and a tax to be levied for the payment thereof, be approved?”

“SHALL the order authorizing $210,000,000 of bonds secured by a pledge of the faith and credit of the County of Mecklenburg to pay capital costs of providing community college facilities, including the acquisition and construction of new community college facilities, the improvement and expansion of existing community college facilities and the acquisition and installation of furnishings and equipment and the acquisition of interests in real property required therefor, and a tax to be levied for the payment thereof, be approved?”

If you plow through that dense prose  (the first item is CMS bonds, the second is for CPCC), the part about approving  "a tax to be levied for the payment thereof"  may sound like you're being asked to OK a tax hike.

That's not the case. Tax revenue will be used to repay the bonds, but that doesn't mean a tax increase.

Bonds are essentially a line of credit authorized by the voters.  As Mecklenburg County officials learned when the recession hit,  if you run up the tab on borrowing you face a painful choice:  Raise taxes and/or renege on promises made during bond campaigns.  The county slowed down on the CMS projects promised in 2007,  resulting in some that haven't been started as the 2013 campaign gears up.  They'll eventually get done  (read an update here),  but not as quickly as voters expected in 2007.

Grand Oak Elementary, a 2007 bond project, opened in August

County officials also rethought their borrowing strategy. They've calculated that they can pay back the $500 million in CMS and CPCC bonds with the revenue they've got, which means they won't have to raise property taxes to handle the debt.  The plan is to spread that borrowing over the next four years.

Here's how County Commissioner Bill James describes it:  "The question of whether a bond package causes a tax increase depends on whether the government issuing the bonds has an adequate bond fund. When I was first elected in 1996 the first item I pushed for was a bond fund. It took 15 years but we finally got one."

"The money to make the bond payments (on the bonds on the ballot) are included in the current tax rate. So, absent some sort of fiscal meltdown, these bonds should be able to be issued without any impact on existing taxes."

So, no tax hike.  The trade off is that the list of projects on the 2013 bonds for CMS is a lot shorter than district leaders would like.  Superintendent Heath Morrison, Associate Superintendent Guy Chamberlain and others are quick to note that $290 million for CMS is tiny compared with the $810 million that's on the ballot for Wake Public Schools in October or the $1.89 billion that Houston voters approved last fall.

25 comments:

Shamash said...

While you aren't being asked to vote for an automatic tax hike, you are giving them the authority to do so if "needed".

So there are no guarantees that they will not levy a new tax just because they didn't last time.

The main reason they do this is to get lower interest since the bond is backed by the full taxing power of the local gubmint.

Isn't that correct?

Anonymous said...

Bonds may get the building built but bonds don't pay for salaries, health insurance, heating, cooling, maintenance, repair...

Yes, bonds lead to tax increases.

Anonymous said...

Yes, it is a tax increase. This is called "tax laundering". They can apply existing tax revenues to pay off these education bonds. That means that the money spent on this debt cannot be spent on police, fire, parks, etc. So if you would like to have services from police, fire, parks, etc., you will need to raise taxes. That's "tax laundering". A tried and true way to bilk the rubes. Works every time.

Wiley Coyote said...

VOTE NO ON BONDS IN NOVEMBER!

Anonymous said...

Anyone who says taxes aren't used to pay off bonds is a liar.

Anonymous said...

Bonds are instruments of DEBT.

Issue bonds, increase DEBT.

We have a DEBT crisis in this country.

You don't solve a DEBT crisis by issuing more DEBT.

Who profits from DEBT? 1% bankers who got bailed out the LAST time we took on too much DEBT.

Vote NO.

Anonymous said...

Anyone living in the Mountain Island Lake area needs to read the list of projects carefully and VOTE NO. NOTHING in the current bond package goes to schools in our area! The MIE K-8 proposal is not included, "promises" to address academic and facility issues at Coulwood are not included. The bonds do not help our area at all!

Wiley Coyote said...

The MIE K-8 deal should be immediately stopped, bonds or no bonds.

I'm not against having a K-8 STEM program, just not at MIE.

Put it at Coulwood where it makes more sense due to land space and facilities already in place.

VOTE NO ON BONDS!

David Knoble said...

Think not too far back in our Charlotte history when we defeated a bond request. Think about the money we had to spend from the 2007 bond issue and the fact that it isn't all done yet. Think about how many of our schools are considered 'over-croweded' whether by CMS standards or parent and teacher standards. There is one thing that is clear. Charlotte is still a growth city and our school population will continue increasing. Money we do not raise and spend now will still need spent, which will easily double the burden later. Interest rates are still low and interest typically makes up 1/2 of the repayment of a bond. Higher interest rates will mean each dollar buys less school. No system is perfect and not everyone will be happy with each new school building location. However, without continued construction people and business will avoid coming to Charlotte and find better school districts. Education has to be our top priority and we must invest in education to continue to hold ground. If you disagree, then I would ask if you work, are you willing to have three people share your desk and chair? If you do not work, would you share your home with another family? That is what we are doing in our schools without additional construction. Instead, spend your time working to get schools built in the right locations, not stopping the flow of funds so that nobody wins.

Anonymous said...

Remember CMS closed schools 2-3 years ago and made so much money leasing them out they did not know what to do with it? At least that is what they said. You cannot be trusted CMS so VOTE NO BONDS. Keith W. Hurley

Anonymous said...

CMS has said that Coulwood is so old and in such a state of disrepair that it will be more feasible to tear it down and rebuild. Check CMS's priority list, can't find tat project listed anywhere. Families leave CMS when because of the school (64% pass rate on eog's, not just the poor facilities) and CMS has demonstrated over and over that they just don't care.

Wiley Coyote said...

9:42....

The MIE proposal is to spend $5.5 million turning it into a K-8 in phases, by bringing in mobile classrooms. MIE will not have athletic facilities and must use Coulwood's.

We can build a new middle school for $29 million, so the truth and what is most feasible lies somewhere between those two numbers.

It has been stated that if the MIE project moves forward, the enrollment at Coulwood would drop. Okay, by how much? Can we move the remaining students to other middle schools and close Coulwood, sell the property?

Ahhh but what will MIE do for sports facilities? They have no room for them.

We closed schools and there were no tragedies under Gorman, but educrats HATE doing that, even though some of the schools students were moved to - like Whitewater - were only at 46% capacity at the time.

If we need a new school to alleviate overcrowding, then build it. If a school needs upgrades, then fix them, but real, verifiable needs should be presented to the level of a gnat so the public can make informed decisions on whether they want to spend the money on needs or wants.

West Meck is just now getting the stadium and sports upgrades of $5 million approved SEVEN years ago. What happened during that time? We seemed to have been okay with making do with what we had, right?

Anonymous said...

Mecklenburg County raised the tax rate earlier this year. A plan was presented that would not have raised taxes and that no-tax-increase plan did not provide for new bonds for schools So, our taxes have already been raised to pay for these bonds. Why are we told that we needy to raise taxes to spur growth, but when growth occurs, we are told we need to raise taxes to accommodate said growth. Our elected officials are either liars or the staff they employ are incompetent! Our local newspaper is their house organ.
VOTE NO.

Anonymous said...

The County has a triple A bond rating - better than the US government. They probably manage debt better than you do if your credit score is less than 780. There is no "debt crisis" at the County level.

The provision to pay for the anticipated debt is already in the previously approved tax rate.

Anonymous said...

10:03:

I don't "manage my debt" by robbing my neighbors. The county does.

Anonymous said...

There is a community meeting for K-8 proposal @ MIE Oct. 3, 6pm in multipurpose room.

Anonymous said...

What kind of demographics compose our growth, in that they cannot/do not pay their own way through increased taxes? Karen Bentley presented numbers to the CO that showed Mecklenburg County was exchanging families who earned 20K.a year more than the ones who were moving in. One would think the kind of growth Charlotte is experiencing might be a topic for debate by our mayoral candidates. Do we intend to increase taxes every couple of years as long as we keep growing. That is not sustainable. Detroit anyone?

Anonymous said...

Vote NO Bonds and also do not vote for any district BOE candidate that supported closing schools. Those BOE folks who lied last election and redistricted school zones dont vote for them either. Just say no to the influence and POOR judgement they have used. Basically thats everyone running for a district seat that gutted our schools. VOTE NO NO NO !

Notorious L.E.V. said...

When you're considering the bonds to BORROW money for the schools...consider the fact that instead of spending the money on schools, like the 2 bit hacks in gov't should have done from the beginning, they're spending your money on street cars and new rides at carowinds. Remember Detroit.

Ghoul said...

My job has me driving by several of the CPCC auxiliary campuses, and they are always empty. Use the space to have more efficiently, and you don't need to steal money from your neighbors.

Anonymous said...

Why do we continue to fund CPCC growth? Let us spend that money on CMS and not on CPCC.

Anonymous said...

I would much prefer funding CPCC if, and only if, all its campuses are fully utilized. But not the Mess that Continues to be CMS.

Anonymous said...

Sure would be interesting to get into CMS's book's and see where they are doctoring them.

Anyway, it would be nice if we addressed population growth with schools in those areas. Instead the urban crowd is still jerking CMS ivory tower around.

If you've not been paying attention the last 15 years or so, the growing population in this city/county has been those addicted to government aid.

As taxpayers are leaving, the "addicts" are arriving.

Anonymous said...

If CMS was broken into 5 smaller districts each and every district would OK bonds. We just don't trust this behemoth, poorly run, out of control, irtesponsible CMS BOE.

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