City leaders are engaging in a bit of financial sleight-of-hand when it comes to the Go Bond’s costs to taxpayers. They have been claiming that the “average impact to the property tax owner” of the proposed GO Bonds up for vote on April 4, “is $8 increase each year.”
This is not true.
“If you were to do nothing but depend on media reports or the bond’s supporters, you might reasonably conclude that the cost of the GO Bond to that owner of a $140,000 home and $15,000 car would be $8 a year.
Based on the City’s own data, the cost of the bond to that property owner would by over $4,100 for the 40-year life of the debt,” said Patrick Tuohey, Western Missouri field manager for the Show-Me Institute.
In order to get to the $8 cost, the city has to do things, both of which are questionable. First, the $8 itself is the average amount the property tax will increase each year, not the amount of the tax itself. This itself is misleading. Second, in order to get the number of the average annual increase down so low, the city factors in the cost all the other existing GO Bonds that will be repaid and result in a lower levy. But these debts will be paid down anyway, independent of the GO Bond vote, and lumping it altogether misleads as the actual cost of this bond. Also, in order to reach the $8 number, the City finance department has assumed that the City will not adopt any more GO Bonds for 40 years.
“Well-meaning people can and do disagree about how best to solve the City’s long-term maintenance problems and whether this GO Bond does enough to address the needs. Laying that aside, the campaign that the city is waging in favor of the GO Bond is a disservice to voters and the democratic process,” said Tuohey. “The real cost of this bond to the owner of a $140,000 house and $15,000 car is over $4,100 over the 40-year life of this debt. The average annual tax paid over those years—to service this GO Bond—will be $106. Anyone who talks about an $8 ‘average annual increase’ is engaging in financial sleight-of-hand.”
“Basing GO Bond costs on the assumption that City Hall will not seek any additional GO Bonds for 40 years is so fanciful as to border on intentionally misleading,” added Tuohey.
Click HERE to see a spreadsheet provided by the Kansas City Finance Department which shows how they have included costs of unrelated existing bonds. You can see how the City has calculated “Annual increase in the tax bill” (line 69) by “annual change in levy” (line 67). We reached our conclusions by calculating the tax value of the house and car by line 64, “Levy for new debt,” which is what voters are being asked to support.
“City leaders are asking a great deal of taxpayers. While the city promises transparency and annual report cards, the way in which they describe the costs of the bonds do not bode well for transparency and forthright accounting.”
Patrick Tuohey is Western Missouri Field Manager for the Show-Me Institute. Show-Me Institute is a think tank devoted to promoting free markets and Liberty in Missouri.