Yesterday the Fayetteville School District announced on their blog that they could be in line to receive $54 million in stimulus credits (read Qualified School Construction Bonds) to help finance the building of a new high school.  Is this program to issue federally subsidized bonds new?  No, the district has known about the program since at least June.  In fact, they have publicly listed the program as a reason to vote for the millage for quite some time.  So what is so breaking about this news?  It must be that the district got some sort of insider information from the state regarding the proportion ($54 of $113 million or 47%) of these bonds they would receive this year.  It is unclear from the District’s post how certain the allocation is or if it is even certain we will receive anything at all.  I hope the district provides the voters with a little more info before Tuesday’s election.

Here is my understanding of how the bonds work. The state would issue the bonds.  The bond holder would receive a federal income tax credit.  The interest rate the taxpayers would be need to pay to attract investors would be partially offset by the federal tax credit.  The U.S. Treasury Department establishes state allocation limits, maximum maturity, and sets a tax-credit rate for the bond program that, on average, equals the amount of interest taxpayers would ordinarily pay on debt.  In summary, issuing this type of bond would reduce the interest rate on our debt.  A reduced interest rate results in a quicker payback period. Which, in turn, means the millage could be rolled back a few years earlier.  The citizens of Fayetteville would still need to pass the 4.9 mill increase, providing the district with $115.825 million to construct a new high school.  The amount of the debt principal would remain unchanged.

Here at Mid-Riffs we have not taken a firm “yes” or “no” position on the millage as of yet.  We recognize that the current facility has some very real deficiencies that need to addressed.  We are just uncomfortable with the enormous size and scope of the proposal that is currently on the table and the resulting tax implications.  The case for the millage has been filled with inaccuracy, competing claims, and borderline dishonesty (admittedly this has been a problem on both sides).  In my Castles Made of Sand post I pointed out how flimsy most of the arguments for the millage really are.  I do believe there are perfectly valid reason to vote for the millage (I plan to post about this later). I also believe there are people who have decided to vote “yes”, who have been thoughtful and honest in their reasoning.  I am just not there.  I worry about passing  a significant tax increase in the midst of a historic economic downturn, and what that could mean for residents and businesses alike.  In a few years my daughter will be attending class in what is, by all accounts, a good school district, and I would like for her to have the best learning environment possible.  However, I think it may be brash to put undue financial pressure on those who live and work in Fayetteville when we could easily break this project (or one that is more modest) into pieces to be completed in phases.  A phased approach would also provide the added benefit of increased accountability as we move through the project.  A friend of mine posted a message as his facebook status that captures my feelings on the millage pretty well:

“A good scenario for all would be for the millage to be voted down, forcing the decision makers into a more realistic, analytical approach to financing and building a new high school. The millage is really the result of trying to satisfy everyone in a community committee of about 200 people. Not the best approach for good decision making.” — A Wise Friend