Referendum tax impact clarified
To the editor:
This letter is intended to provide additional information and clarification regarding the tax impact for the proposed bond referendum on Tuesday, April 18.
The District’s financial advisers, Ehlers, recommended a “wraparound” re-payment structure for the debt for the proposed bond issue. This structure would keep taxes paid to the school district for debt service payments relatively stable throughout the term of the proposed new debt, which would continue through taxes payable in 2037. This is a typical re-payment plan and practice proposed by school districts in structuring building debt. It was approved by the school board as the most responsible plan for taxpayers, as they felt that most taxpayers would prefer to have the total debt service payments “leveled out” over the course of the 20 years.
Payments on the proposed new bonds will increase slightly beginning with the taxes payable in 2024 and by a larger amount in 2027; those increases would be offset by decreases in payments on the District’s existing bonds. This includes the final payoff in 2024 on the 2003 bond issue for the high school, renovation of the high school into the middle school, along with other projects at Park Side and West Side. Approval of both ballot questions will cause an increase in taxes payable for 2018, estimated at $123 on a $150,000 home. This is the immediate impact on taxes, and, as mentioned earlier, this new bond issue would extend out for 20 years, which is a normal term for school building bond issues.
Approval of the bond issue would eliminate or reduce the size of the decrease in taxes paid that would have otherwise occurred for taxes payable in 2024 and 2027.
On the accompanying graph, the darker portion of the bars (the estimated tax rate attributable to the new bonds only) is certainly higher in later years than it is for taxes payable from 2018 to 2023. This is because the district’s existing debt (the lighter portion of the bars) decreases in 2024 and is totally paid off after 2026.
In summary, while the portion of taxes paid on existing and proposed new debt fluctuates throughout the 20 years, total debt service taxes paid will remain relatively constant over this period. Again, the initial tax impact on that $150,000 home would be $123 if the bond referendum were to pass. (See graphic below)
On one other note, here is the current school indebtedness by issue including capital leases payable*, which are not part of the debt service levy as they are paid off through the District’s general fund:
• Other Post Employment Bonds $360,000
• 2003 general obligation building bonds $15,925,000
• Alternative Facilities Bonds $2,915,000
• Qualified Zone Academy Bonds $ 4,933,000
• Capital Leases Payable* $ 1,392,303
Therefore, the district’s total debt service amount is $24,133,000 and $1,392,303 in capital leases payable. By the way, the district’s indebtedness information was part of an article in February in the Independent about the bond referendum.
For further data on tax impact and other building bond referendum information, please log onto either of these links: http://ehlers-inc.com/custom/tax information/Marshall/https://www.marshall.k12.mn.us/Page/458
I trust this information is helpful to you in making an informed decision. I can be reached at bruce. firstname.lastname@example.org or 507-929-2603.
Director of Business Services
Marshall Public Schools