Wednesday, August 4, 1999
Bonds are still better than SPLOST

This is about the selling of the school sales tax, and smarter alternatives.

A favorite in the bag of tricks of a devious salesman is distracting the customer. Ask the customer if this will be “cash or charge,” and make him overlook that he never agreed to buy in the first place. Or emphasize the low monthly payments, and divert his attention from the inflated sale price, the high interest rate, and the length of the payments. Educating consumers to be smart is a never-ending struggle. Our intelligence is forever tested.

One IQ test coming up, again, involves the financing of our public schools. We, in Fayette County, have a school board hell-bent on a sales tax. To get its way, it plans to distract us with details about projects which it says we badly need but can't have unless we fork out with a sales tax.

The first question the smart citizen will ask, of course, is whether we really need all these projects. The correct answer is that we probably need some of them immediately, some later, and some never as they are pork barrel projects offered as bribes for localized support.

Remember the salesman who implied that unless you bought the shiny new car loaded with all the expensive options, right now, you'd have to walk? How he tried to steer you away from a smaller car, or a used one? The devious salesman seeks to distract you from thinking about alternatives. He does it in part by talking endlessly about his product's features, creating a sense of urgency for you to buy, and trying to overpower your own efforts to be financially responsible.

Even assuming for a moment that the school projects we're asked to finance are all worthy of support, there's still the question of who will pay, and how.

To some of us, it would make sense that schools be paid for as they are being used, just like homes with mortgages. That means spreading the cost over 25 years, rather than only five. Just as many of us have not been residents of Fayette County for all of 25 years, many of us won't be here for all of the next 25 years. Why then should we prepay for the schools that will be used over the next 25 years? It's fair, and smart, to spread out the cost over all the users.

What we can raise through a 5-year sales tax we can even more easily raise through 25-year bonds. (The school board won't give you this choice and doesn't want you to know about it.) A competent expert analysis shows that the property taxes needed to finance bonds in an amount equivalent to what the sales tax would raise would cause about one-sixth the pain to the pocketbook. In other words, for each $6 we'd pay in sales tax we'd be out of pocket only $1 with a property tax. Let's see how this happens.

The most sales tax you're likely to pay is on cars. Here, a 1-percent sales tax increase can easily cost you $250. Each time. Ouch! (So much for “the penny tax.”) You'll also pay it on food and clothing. It so happens that businesses like Home Depot, Wal-Mart, the banks, drugstores, grocery stores, etc., don't need to buy cars, food or clothes, so for all practical purposes they don't pay much sales tax. (In fact they receive a small commission for collecting sales tax.) But businesses do pay property tax, over 25 percent of it, in fact, so they would help pay the bonds.

The school board hopes to raise $15 million in sales tax in 2000. Out of 100,000 residents, that's $150 per man, woman and child, or about $450 per household. Business and visitors' purchases may cut that $450 down to $400. If the board issues bonds for the same amount as the sales tax would yield, the average cost per household the first year is likely to be $125, and as the property digest increases at the 8-percent annual rate the school board is projecting, that cost would decrease to $92 by year 5.

Deducting this amount on income tax returns results, in most cases, in a first-year net cost of $83 per family, and $61 in year 5. That sure beats paying $400 per year! (Believe it or not, bonds would have the average family pay $961 over 25 years, instead of $2000 over five years with the sales tax. Of course, new families that move into the county in years 6 to 25 would pay something toward the bonds, too, which would only be fair.)

When your children come home and tell you, “But Mom, all the other kids do it!” what do you say? (Answer: “You're not like the other kids, we love you more.”) Well, a bunch of other counties around us have, lemming-like, adopted an extra sales tax. Are they smart? No. Are we in Fayette County smarter? Our IQ test is coming up on Sept. 21. “Just say no” is not just for our children, and not just about drugs.

There is a positive aspect to this. If the sales tax can be defeated again, the school board may finally realize it needs to go to bonds, the less painful alternative by far. The board would be wise to break down its list of projects on the ballot into separate items to enable our responsible citizens to approve the most worthy projects, like the construction of the new schools, while letting us line-item veto the pork barrel projects.

Unfortunate as it is that the school board hasn't yet seen the light, another NO vote on the sales tax will help move it in the right direction. The school board wants to hold pep rallies in support of its plans. (Those kamikaze pilots in World War II must have needed these pep rallies pretty bad, too.)

All I can say is that those who would accept a genuine public debate on this, not just a pep rally, will find me willing to go speak about it. The education of our children is important for all of us, but why should our financing alternatives be limited to the most harebrained of them all, that tax du jour known as SPLOST?

A NO vote on Sept. 21 is, regretfully, still the responsible answer to the school board's irresponsible parent-pandering plans.

Claude Y. Paquin
Fayette County

cypaquin@msn.com


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