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State and Local Government / Budget and Spending

North Kansas City Proposes A “No Tax Increase” Bond Issue

By Patrick Tuohey on Jul 25, 2016

The North Kansas City School District is asking voters to approve the issuance of a $114 million bond for the construction of new facilities to meet the needs of a growing population. The Show-Me Institute has no position on whether the district ought to take this project on; we just quibble with the misleading argument in favor of it.

The Kansas City Star editorial board, not entirely surprisingly, supports the bond, and concludes its editorial with:

The district’s current debt service levy of $1.29 per $100 of assessed valuation won’t retire for about 20 years. Approving the bond issue in August would extend the debt levy 10 more years. Because of the extension, taxes that residents and businesses pay to the school district will neither go up nor down whether the measure passes or fails, officials say.

Two years ago, my colleague James Shuls addressed this very argument. He wrote,

Bonds work in much the same way and school districts can “refinance” to extend the term of the bond. They market this to the public as a “no tax increase” bond issue and claim that your payment will not go down or up whether the issue passes or not. Your tax payment will not change, but you will be paying for a longer period of time.

The bond issuance may be the exact right idea to meet North Kansas City’s needs. Shuls suggests calling such efforts “no tax levy increases” because, in fact, the new bonds will require the expenditure of more tax dollars. Proponents know better, and would be more credible if they just leveled with voters rather than spin fanciful yarns.

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About the author

Patrick Tuohey

Senior Fellow of Municipal Policy

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