Taxpayers in College of the Mainland’s jurisdiction have another opportunity to save themselves a little more than $4 million over the next several years by supporting ballot Proposition A.
The proposition calls for issuing general obligation bonds to refinance maintenance tax debt remaining from $20 million issued in 2017 to make immediate repairs and upgrades to facilities and infrastructure at the college campus off Amburn Road.
Taxpayers supporting the college are paying 4.2 percent interest on about $14 million remaining of that debt.
The college’s financial officers estimate they could sell the $14 million or so in general obligation bonds needed to retire the maintenance tax debt at an interest rate of about 1 percent, maybe lower.
Shaving three or more percentage points off the interest rate will save taxpayers as much as $4.3 million over the life of the loan, college officials estimate.
The situation is similar to a canny homeowner taking advantage of the historically low interest rates available now to save much money over the life of a mortgage; it’s a smart move.
It is, in fact, a no-brainer.
Unfortunately, that’s no guarantee Proposition A will pass. It might not unless people can read past the murky, misleading prose of the ballot language to comprehend what they stand to gain from voting yes.
The proposition, which taxpayers can begin weighing in on when early voting begins Monday, is similar to one they rejected during the November general election.
Whether it resulted from opaque ballot language or just the odd dynamics of that election, failure of the measure in November was a classic example of taxpayers voting against their own best interest.
By rejecting the November proposition, voters decided it would be better to give $4.3 million to the hedge funds, massive retirement funds, foreign governments and others who buy and sell public debt than to keep the money in their own community.
And although the Proposition A on May 1 ballots is similar to the failed November proposition, it’s different in one crucial way.
College leaders before the November referendum planned to spend the $250,000 or so they would save each year through refinancing on academic operations.
This time, they intend to return that money to taxpayers through a cut in the maintenance and operations tax rate.
It works like this.
By approving Proposition A, voters would allow the college to shift the debt service costs, the periodical payments made to pay off the original debt and interest, from the maintenance and operations tax rate to the debt service rate.
That shift requires increasing the debt service rate to accommodate the general obligation bonds. Because of that, the ballot language says — “levying and imposition of taxes sufficient to pay the principal of and interest on the bonds and the costs of any credit agreements. This is a property tax increase.”
What the ballot language doesn’t say is by agreeing to a slight increase in the debt service rate, taxpayers are voting themselves a decrease in the maintenance and operations tax rate.
If the proposition is approved, there would be an overall decrease to your property tax rate, according to the college. “Based on projected numbers, if the refinancing measure is approved, the new tax rate would be an estimated $0.287747 per $100 valuation versus $0.290364 per $100 valuation if the measure does not pass.”
The bottom line is approving Proposition A will allow the college to save about $4.3 million and pass those savings back to taxpayers.
The rest is just bookkeeping and half-true legalese, which in this case obscures what’s clearly in the public’s best interest.
The college’s plan is more than simply reasonable; it’s an example of sound, proactive fiscal management.
We say yes to Proposition A and urge voters in the Dickinson, Hitchcock, Santa Fe and Texas City school districts, all of which are in the college’s jurisdiction, to do the same.
• Michael A. Smith
Editor’s note: The Daily News, which owns and operates a printing plant in Texas City, pays substantial property taxes to College of the Mainland.