Amazingly people think bond debt is free money with little to no tax increase required

Listener Club member Susan writes from Wichita Falls:

Dear Mr.  Pratt,

I am an online member of a group here in Wichita Falls that is a neighborhood group (but covers a lot of the city) and members post a variety of information, ads, lost and found, etc. every day.

I took the liberty of reposting a couple of things you have written about the upcoming WF bond proposals. It has generated a lot of responses, most of them thanking me for the information. However, there have been some diehards that have consistently replied to me that I have it ALL wrong – there will be NO tax increases for the long term and the proposed tax increase is from 3%-6%, etc. etc.

I have found the comments very telling and interesting – it is truly a microcosm of the city and how people think ( or don’t think).

You may already know that a school bond proposal is coming not far behind this current bond issue. The school board wants to either consolidate the three high schools into one mega school or build two new high schools. Lots of the movers and shakers in the community went to Wichita Falls High School and they are determined that their alma mater WILL NOT be combined with any other school, but will have its own new school. I am sure it is going to be interesting.

The new tax valuations hit everyone over the past few weeks and I have heard from people who had the valuation raised $10,000. These are people who are “just making it” now. Can you imagine the effect if the bond proposals pass?  Our own tax valuation went up $8,000. We have only owned our home for one year, and because it is a fairly new built home, we have done nothing to it. It is difficult to figure out how they came up with adding an $8,000 valuation to the house.

I am learning a lot from listening to you and I thank you for continuing to be a truth teller and informer for all of us on very important Texas issues.

Susan
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Robert Pratt photo Copyright Pratt on Texas

Robert Pratt

Pratt replies:

This is something that continues to amaze me, that people think bond money is free money.

The debt service payments are the first to come out of a budget so of course there must be a tax increase.

If new debt replaces old debt service payments rolling off they may not raise the tax higher than it was set to pay back the old debt, but without the new debt taxes would go down by that amount so it is still a tax increase.

An earlier KFDX story said the increase would be 20% and I referenced that in this commentary: http://prattontexas.com/2018/04/29/wichita-falls-bond-debt-twenty-percent-tax/

The KFDX story yesterday said it was 23%.

Comments

  1. You don’t have to be schooled on this stuff if you’re the one writing the check.

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