My first question is, will this cause my already high taxes to go up? A little research turned up the following information.
General Obligation Bonds (G.O. bonds)
When a state, city or other issuer issues general obligation bonds, this means that the issuer is guaranteeing repayment of the bonds using any means necessary. The full faith, credit, and taxing power of the issuer are backing the bonds.
This means that the issuer is going to use any taxation power in its authority to make sure they get paid back; the issuer is putting the revenues from every type of tax on the hook to guarantee the bonds: Income taxes, corporate taxes, property taxes, sales taxes, excise taxes, gas taxes, any tax that can be levied by the issuer. This is why it is called a general obligation bond: The issuer is generally obligated.
If the issuer has any problems paying it back, the issuer has to raise taxes or come up with the money somehow, some way to pay it back. The issuer may even have to sell assets to do it. If the issuer misses a payment, known as a "default", a judge can order the issuer to take corrective action to raise money to satisfy the bondholders.
According to the city, these bonds will be repaid from property taxes.
That's $182,150,000 in new' credit card charges' for the taxpayers of College Station to add to current 'charges' of
$353,536,318. How will this affect my 'credit card bill', aka property taxes?
The city can issue $45-60 million in bonds without increasing property tax rates. So, doing a little basic math, this means if the entire committee recommended list of goodies is approved, taxes will be increased to cover an amount between $122,000,000 and $137,150,000. Of course they could increase taxes for the full amount, but I'll go with these numbers for now.
So how much to taxes have to be increased to pay for this amount?
A quasi-rigorous search didn't turn up a specific answer to this question. I did, however, find information on how bonds increased taxes in the City of Richardson:
quote:
As for why the tax rates have been increased, there may be various reasons, but one clear cause is the issuance of bonds. The tax rate increase from 2010 to 2011 (.06) was a direct result of the 2010 $66 million bond program, and the tax rate increase from 2006 to 2007 (.05) was a direct result of the 2006 $55 million bond program.
The increases prior to this point (2002 to 2003 and 2004 to 2005) may have been at least partially related to the 1997 $77,999,319 bond program. Initially, when the 1997 program was advertised, it was expected that there would be no tax increase associated with the bonds.
Using those figures as a general guide, taxes would increase in the neighborhood of 0.12, or roughly $26.00 on every $100,000 of property owned by taxpayers.
Last year the city increased property taxes by about that amount - 12.09% - an amount that increased taxes by $26.54 on every $100,000 of property owned by taxpayers. (Math/tax geniuses please correct my undoubtedly numerous errors)
What seems clear from everything I've read is that passage of the bond gives the City the right and the obligation to increase taxes in the future in order to pay off the bond, even if they tell you today that there will be no increase.
Looking back at the 2008 bond election, it's interesting that the city maintains its passage had "
no impact on property tax rate". I think it's a bit disingenuous to make that claim - perhaps, "did not directly lead to property tax rate increases" would be a better way to explain its passage. Undoubtedly, it had an impact, just indirectly.
Why were taxes increased 12.09% last year? Could it be...
...wait for it...
...to pay for the 2008 bond issue?
FYI, here are the committee members:
Chair: Rod Thornton
CoChair: William Smith
Transportation Subcommittee
Chair: Tedi Ellison
CoChair: Beverly Kuhn
James Batenhorst
Mark Green
Linda Harvell
Brittan Johnson
Ronald Kaiser
Facilities Subcommittee
Chair: Thomas Taylor
CoChair: Kevin McGinnis
Gary Ives
William, Lartigue. Jr.
Scott Raisor
Rene Ramirez
Garland Watson
Parks Subcommittee
Chair: Jon Denton
CoChair: Marc Chaloupka
Sherry Ellison
Don Hellriegel
Keith Roberts
Chris Scotti
Dan Stribling