District 225 is going to referendum in November to issue $94 million in bonds. They have said what they want the money for, but have not answered the question, “why is a referendum necessary?”
The question arises because it is not necessary to obtain voter approval to issue bonds for building additions and repairs to existing schools, or for refunding bonds -- things the District says it wants to do with the $94 million. District 225 has built huge additions to schools without asking voters if they approved. Refunding bonds were issued in 2003 without voter approval. The fact is, referendum approval is only required for building bonds to build separate new schools, and there is no hint of that here.
The answer to the question, “why a referendum?” is that taxes levied to pay bonds approved by referendum are not subject to the tax cap limitation. And bonds issued in the future to refund referendum approved bonds will also be exempt from the tax cap limitation. This $94 million referendum is a scheme to bust the tax cap.
Tax revenue to pay bonds that were part of the district’s total bond debt as of March 1, 1995, when the tax cap law came into effect, or replacements for those bonds, is also excluded from the tax cap.
In 2005, the District reported long term outstanding bond debt of $ 44.7 million which it proposes to pay off with part of the new $94 million referendum bond proceeds. The proposed refunding will add the “referendum-approved-bond” tax cap exemption to the “existing-debt” tax cap exemption to allow the District to issue approximately $139 million in debt outside the tax cap and triple current taxes for bond debt service and related allowances to approximately $6.4 million annually. This increase will be on top of annual tax increases allowed by the tax cap.
The tax cap law is designed to limit increases in total property taxes billed. The limitation slows the growth of property tax revenues to taxing districts when property values and assessments are increasing faster than the rate of inflation. As a whole, property owners have some protection from tax bills that increase only because the market value of their property is rising rapidly, as it has in District 225. The tax cap law is a good law, and it is working.
Taxpaying homeowners should vote No in November and save the tax cap.
Lawrence T. Miller