Plano ISD will have a public Hearing on a MASSIVE Tax increase proposal this August 20th. The financial situation even drew the attention of the premier fiscal responsibility folks at EmpowerTexans who produced this piece on it. Well worth reading.
Public Hearing info – (This will be ongoing LONG after our meeting the same night, most likely; some of us may go straight from our meeting to the public hearing) Address: 2700 West 15th Street, Plano, Texas, 75075 (MAP)
This article lays out the plan in terms of them trying to make a $390 EFFECTIVE tax increase on a $300K home digestible by hiding part of it by shorting debt servicing
“the district would restructure its debt to delay payments that would reduce the debt service tax rate by 5 cents.That would mean the total tax rate would increase about 8 cents to $1.453 per $100 of assessed property value. Those with a house valued at $250,000 — about the average value of a home in the district — would see an increase of about $187 in annual taxes”
In other words, they are stretching payments out for MANY additional years because they have overbonded the district, to the tune of very close to $1 BILLION. Essentially doing this ‘for the chiiildren’…by pushing the payments for their excesses farther out ONTO some of those children, rather than paying it off on the schedule first designed. Little different than taking out a second mortgage to cover credit card bills. The bond holder’s CANNOT be very happy about this prospect; can the district’s AAA bond rating truly survive this?
Here is the powerpoint presentation for tomorrow night; a key statement on slide 29 of the 34.
“Fund Balance in operating fund is backstop if market changes make restructuring uneconomical”
Basically, they don’t even KNOW if they can get away with the debt ‘restructuring’ (unlikely without adding significant long-term costs, given increasing interest rates). Page 30 shows the REAL problem in Plano; debt servicing costs, currently 6 TIMES the shortfall they are concerned about, They want to shove the payments farther out- paying in the $100 million a year range for a longer period within the overall 25 year footprint of the debt. (and that is the CURRENT footprint; Statements like that on page 26- “Return to pay as you go for technology and buses for at least two years“- suggests more fun coming in a couple of years, even WITH passage.)
UPDATE: Essentially, this is a transfer of capacity from serving bonded indebtedness that is over HALF that which is dragging the city of New Orleans toward bankruptcy- to operational budget. Even IF they could do this refinance magic at times like these of increasing rates, does it not make better long-term sense to do so and then use the extra capacity to FURTHER reduce indebtedness? As for the operational budget; well, before they rubber-stamp the request, possibly they should have considered what the 8 cents of increase would have done to cover the shortfalls.
It’s looks like fiscal insanity that must be challenged. The voters WILL have their say on this and it is long past time that a SERIOUS public discussion be held that goes well beyond vacuous statements like ‘Well, You can’t say it’s a bad thing if money is going to schools.’
Bottom line: when you are slated to drop over $100 million a year to SERVICE DEBT, that is what needs to be addressed; now and for quite some time.