Wednesday, October 18, 2000

When you see that school bond referendum on your ballot on Nov. 7, should you vote Yes or No?

One way to reason this out is to go through a series of questions.

Question one is whether we need new schools in Fayette County. As we witness new homes being built, and new families moving in, we can safely assume that the number of children for whom we must provide an education is growing. If school administrators were ever giving serious consideration to year-round schooling with students dropping out one quarter out of four on a rotating schedule, they were out of their minds.

Likewise, dual sessions with students in school from, say, 7 to 12 in the morning, and others in school from 12 to 5 in the afternoon, would be disruptive and unfair to both parents and students. Perhaps it's good enough in an emergency, but as a solution it's harebrained.

There is one alternative that beats all the others, and that is erecting new school buildings. We can quarrel about how many and how fast, but the idea of building schools is a very reasonable one.

If you're still with me, question two is how we will finance new schools. The state of Georgia contributes money for that, and we may gather from current presidential debates that the federal government might contribute, too. (Let me explain to all the conservatives out there that I do understand that it is also our own tax money the federal and state governments are returning when they do this.) But the bulk of the money, it seems, has to come directly from us, the people of Fayette County.

One way to raise money which looks easy, but is in fact incredibly burdensome, is the sales tax. Voters who understood that the penny tax is no longer innocuous when you get to the sixth penny rejected that twice. (I congratulate them for showing good sense.) Since a county school board's only other potential local source of income is the property tax, the choice is then reduced to paying cash for the local share of new schools or financing it through bonds. In a fast-growing county, paying cash for multiple schools is not a reasonable alternative. The answer to question two is thus "through bonds."

Question three has us asking what kind of bonds are best. We could now jump to question four and ask ourselves whether the bonds the school board wants us to approve are the best. It's the school board which bears the responsibility of explaining its bond proposal to us. It should do it in an honest and forthright manner, but I haven't seen it do it. So I'll do it for them.

By the way, the best school bonds are those which are the easiest for the taxpayers to repay. They perhaps also ought to be the easiest to vote for, since it takes a Yes vote before they can be issued and schools built. Having the owners of commercial property pay as much as 25 percent of our school property tax, as they do, helps homeowners (who pay the rest) quite a bit. Being able to take the school property tax as an itemized deduction on federal and state income tax returns also helps many homeowners. The low interest rate payable on tax-exempt school bonds also helps. The last remaining helpful feature would be an easy repayment schedule.

This is where the current school board dropped the ball. Lurking somewhere within the school administration are right-wing radical thoughts about the evil of borrowing and paying interest. Haunted by thoughts of the national debt, some people wrongly associate it with all public financing. (Little do they realize that our current economic prosperity dates from the Reagan years, which then saw our national debt triple from about $1 trillion to $3 trillion. Obviously, President Reagan understood more about the benefits of borrowing than they do.) So under the influence of voodoo economics advisers, the school board proceeded to devise a bond repayment schedule which works like this.

First, understand that in spite of official statements about 10-year bonds, we are not looking at real 10-year bonds. We are looking at a series of bonds which total $65 million. Some are repayable in one year. Some are repayable in two years. Some are repayable in three years. Some are repayable in four years, etc., up to 10 years. The amount repayable after one year ($515,000) is small. Then it triples in year two. Then it doubles again in year three (to $2.93 million). Then it doubles again (to $5.92 million) in year four. Principal repayments continue to escalate with scheduled repayments of $13.0 million in year 8, $13.7 million in year 9, and a final smaller payment of $2.2 million in year 10. That's roughly our repayment schedule.

The effect of this unusual schedule on our property taxes is interesting. The school bond tax for currently outstanding bonds is scheduled to go down appreciably in 2004 and again in 2008, so the repayments for the new bonds were arranged so as to cancel this out and fill in the gaps.

In addition, realizing that level annual bond repayments would produce a lower tax as the population (or tax digest) increases, the school board factored in an anticipated population growth of 5 percent per year. The net effect of all this, and the gradual reduction in interest as bonds are paid off, is to produce a school bond tax amount at about the 1998 level, which would then remain about the same until November 2009.

I estimate that the average household which pays $240 in school bond tax this November might, with the new bonds, pay close to $320 in each of years 2001 to 2009.

The big question is whether you should vote Yes on this plan. Here's how I reason this out. The kids need the schools. Paying for the schools with bonds is the most reasonable way to provide these schools.

The school board's plan is pretty weird and certainly not the best that could be produced. On the other hand, getting anything better out of the school board and the school administration is at best problematical and would waste valuable time. Moreover, the proposed school bond taxes will be as affordable as the actual tax was in 1998. So, while holding my nose, I would be inclined to vote Yes.

If the bond issue passes, do not congratulate the school board and administration on their fine bond plan. It is flawed. The tax is still higher than it ought to be, the tax digest increases the board anticipates are iffy, and the whole plan leaves no room for the issuance of more bonds, in four to six years, for the new schools that may be needed then. The current bond plan is simply better than the sales tax alternatives the board presented in 1998 and 1999.

If this bond issue does not pass, the new board should be encouraged to come up with a regular run-of-the-mill bond issue with level payments for 20 to 30 years, which has all the usual good features of bonds and is a lot easier on the taxpayers' pocketbook.

Looking at their work and their methods, I occasionally tell myself that this school board is to public education what Inspector Clouseau is to public safety. It's for the kids that I'd vote Yes, not for the school board.

By the way, let me remind homeowners who have reached age 65 that they may be exempt from all school property taxes (and at least from half). It seems to me it might be unfair for them to vote against the bond issue if they don't have to pay the tax. They don't have to vote Yes: they could just abstain. With their own pocketbook unaffected, they can let their conscience be their guide.

Those homeowners who are not swayed by idealistic thoughts about our duty to provide a proper education for our children might reason that a properly funded school system enhances the value of their property. They might view the school tax as an insurance premium designed to keep up the value of their own property.

The public is entitled to being told the truth, the whole truth, and nothing but the truth, about the proposed school bonds. I hope this explanation goes a long way toward helping the voters.

Claude Y. Paquin

Fayetteville

cypaquin@msn.com

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