Daniel Borenstein: Voters kept in the dark on school bonds
VOTERS IN seven East Bay school districts will be asked Nov. 2 to approve a collective $854 million of bonds to fund school construction. By the districts' estimates, which they're not sharing with voters, repayment with interest will increase property tax bills $3 billion.
Despite the high stakes, voters who read the information that comes with their sample ballot won't be able to intelligently evaluate the measures. Disclosure requirements are grossly inadequate. Voters are being asked to cast ballots in the dark.
In today's editorial, we evaluate those measures. We on the editorial board can extract information from the districts that most voters cannot. After all, district officials want our endorsement of their bonds. But the school districts should provide that information to all voters.
Unfortunately, I suspect most voters don't understand bond measures. I wonder how many realize that this is a loan that must be repaid. I wonder how many voters realize that property owners are going to pay more taxes to retire the bonds.
Of the seven East Bay measures, the ballot wording for six of them -- each up to 75 words long -- never mentions the word tax, never indicates that property owners must cough up more money.
Most of us want to support public education. But school officials need to start being straight with voters about the cost -- and it looks like it will require new state laws to ensure that happens.
The deception doesn't end with the ballot language. The cover-up continues with the supplemental materials mailed to voters. If you live in Martinez, Pittsburg, Knightsen, Berkeley, Emeryville, San Leandro or the Ohlone Community College District, look carefully at the official information you receive from the elections office next month about your school bond.
You'll find two key statements, the county counsel's analysis and the tax rate statement signed by the superintendent. Buried in this boiler plate is some minimal information about the bond measure.
It tells you the amount of the bonds that will be sold. And it tells you about the tax rate. (Finally a hint that your taxes are going up.) Tax rates are usually expressed as dollars per $100,000 assessed valuation. For example, a $60 rate means that the owner of a house assessed at $300,000 would pay $180 each year.
Tax rates often fluctuate. The tax rate statement tells you the rate charged to property owners after the first series of bonds is sold and after the last series of bonds is sold. (Bonds are usually sold in groups, or series, not all at once.) Finally, it tells you the top tax rate. That's all good information, but it's not nearly enough.
If you took out a home loan you'd want to know how long the payments would last and how much interest you'd pay. You'd also want to factor in your payment obligations for other loans. The same goes for bonds.
But the official information doesn't tell you that in the Emeryville school district, three out of every four tax dollars will go to interest on the bonds rather than the principal. (By contrast, if you bought a house today and paid it off in 30 years, you'd pay equal parts principal and interest.)
Finally, the tax rate statements contain "the best estimate of the highest tax rate." But those estimates are dependent on forecasts about property values in the school district. The higher the total assessed value, the lower the tax rate for each property owner.
Unfortunately, as we've found, the projections of assessed value growth are all over the map, anywhere from 3 percent annually in San Leandro to 7.5 percent for 2014 to 2018 in Emeryville. Interestingly, none of the financial analysts forecast a decline for next year. But that's what Christopher Thornberg of Beacon Economics, who does this sort of forecasting for a living, predicts will happen.
What if the projections are wrong? Property owners will pay a higher tax rate if the bonds have already been issued, or the districts will have to delay issuing some of the bonds, stretching the tax payment farther into the future. Either way, the taxpayers lose.
That doesn't necessarily mean we should oppose school bonds any more than we should not buy a house because it might not appreciate as much as we'd like. What it means is that voters should go in with their eyes wide open, and district officials should be honest and upfront about the costs and real risks. Then we can make educated decisions.
This convinces me, I'm no way voting for measure j. Not that I needed much convincing.
ReplyDeleteI was close to convinced before I saw that the editorial was by Dan Borenstein--that guy is so conservative. I have to discount him because of his past misguided columns.
ReplyDeleteSo he's lying about the numbers?
ReplyDelete