HELP!! My Commissioners are wasting my tax money.
Bastards.
I got my second glossy colored 8.5x11 mailer this week from the Home Ticks Johnston County Property Owners Against Transfer Taxes. It says,
Johnston County doesn't have a revenue problem -- it has a spending problem.
"Hmmm", I thought. No time to waste!
I'd better look into this thing, post haste!!
Actually, I had a snarky suspicion that the only problem here was the Home Ticks Johnston County Property Owners Against Transfer Taxes honesty problem. Keep reading to find out where that question led me next ...
I started out with a basic question,
Does Johnston County really have County Commissioners who were smart and innovative enough back in the 90's to reduce the cost of building schools to lower than most other counties in the southeast, but who are not smart enough to set our tax rates at a level that would pay for those schools as we go rather than letting us get into a situation where $29 MILLION DOLLARS goes swirling down the drain this year ... into the hands of fat cat bankers?
Now ... all my current County Commissioners are Republicans. I have zero political or monetary motivation to defend them, and I'm not defending them, which you'll see if you keep reading.
In fact, my Commissioners have a tendency to do some really stupid stuff.
For instance, this year, they've put up for a vote a pointless non-binding county-wide referendum in a year when only municipalities should be having elections. As a result, the whole county has to pay the cost of elections JUST for this referendum. Several Commissioners have already arogantly declared they'll flatly ignore the will of the people even if we pass the transfer tax referendum.
Ok. This was just a stupid waste of money. Can I get an, AMEN?
BUT ... back to the spending problem the Home Ticks were lying about when they designed these expensive glossy colored 8.5x11 mailers ... our so-called county SPENDING problem.
It just so happens that back in the 90's Johnston County started building schools using a one-design plan. Each type of new school (elementary, middle or high school) is built the same way, every time, and they are built to be easily/inexpensively expanded. A few years ago when the cost of building a school in NC was ~$96/sq ft, it cost Johnston ~$84 a square foot.
If that isn't enough for the Home Ticks transfer-tax-hating souls, they can read here for themselves what our good buddies at the "low-cost" government rag Carolina Journal wrote back in 2005 about Johnston County's school construction costs.
Then Friday, I got my county/city tax bill. Right there under "How your Johnston Property Tax Dollar is Spent" I actually looked to see if I could find where our Johnston County "spending problem" might be.
Guess what? I found it!!!
Debt Service: 28,812,307 17.12%
::::gulp::::
$29 million in revenue goes to pay interest?
::::blinks::::
Over seventeen percent of Johnston property taxes goes to for-profit banks to pay the interest on our county loans?
::::mouth hangs open::::
So ... Johnston County at one time had Commissioners who were smart enough to reduce the cost of building schools, but who were NOT smart enough to set tax rates at a level that would pay for those schools as we go rather than allowing almost $29 MILLION go swirling down the drain just this year.
I know some folks don't mind bonds. They're useful instruments when you have an emergency, but they are not desirable and they should be avoided if possible, and this is why I think that way:
Yes, people borrow money to buy a house and they are quite happy to pay interest for the privilege. But they do that because they get tax breaks and because the value of real property (under normal circumstances) appreciates steadily and reliably over time, making the house an investment. In other words, borrowing to buy a home makes sense (for some people).
Yes, businesses borrow money to build out and increase production and they are quite happy to pay interest for the privilege. But they do that because their business plan indicates that a 4% cost in interest will return a 10% increase in profits every quarter thereafter. In other words, borrowing to build up a business makes sense (for some businesses).
It seems to me that the business people who run our County government have completely forgotten the business reasons businesses borrow money ... Which is to make more money. Government is not a for-profit venture and should not behave like one.
All this leads to some simple questions:
Will the value of our schools increase so we can sell them in ten years for double what we paid for them?
Umm, I don't think we sell schools on the free-market, do we?
Ok, so will the additional schools allow us to serve more customers and increase our profit margins through volume?
Umm, I don't think we charge tuition for public schools, do we?
Shut up!! We need these schools now!! We're busting at the seams!!
Yes, we do and we are.
But, puhlease ... that fact is not a surprise to anyone. We saw this situation coming years ago. Our busting-at-the-seams growth and these new schools were in county long-range plans years ago. Why is it that we still cannot pay for what we knew long ago we would need?
I know why.
Johnston County is FORCED to borrow money to build schools because our County Commissioners are power loving chickens freeeeRange-Market-Republican puppets in the hands of the Real Estate Industry who would rather blame large property tax increases on the citizens who vote for bonds rather than take the heat for smaller property tax increases they could have put in place ten years ago when they saw this budget need coming.
End of story. Search over. Case closed.
- Leslie H's blog
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Excellent.
Front-paged.
Super!
A sequel to come tomorrow. :)
Gotta go to Smithfield now!!
Excellent - I agree
Well done Leslie H
Not exactly
There's one VERY GOOD reason to fund capital programs with bonds-- the things they build last a long time. By borrowing the money to last as long as the expected lifetime of the project, everyone who potentially benefits from the existence of that school or bridge has to pay for it. Otherwise, newcomers to the county end up benefiting from the largess of previous generations of taxpayers, some of whom would have long since moved away or died.
Bonds and property tax
While fiscal responsibility plays a part in bonding capacity rating agencies look to the revenue stream for ability to repay loans. Keeping taxes artificially low by borrowing works politically for conservatives in the short term. Dealing with an infrastructure bubble for growth becomes problematic with a limited revenue stream with or without bonds. Property tax is the work horse of county revenues. To increase revenue for additional bonding capacity, counties usually look to property tax increases as sales tax increases usually can't generate enough revenue and are most regressive.
Regardless of whether you agree or disagree with bonds, there is a need for additional revenue for the infrastructure needs of rapid growth. By putting both transfer tax and sales tax on the ballot so soon commissioners (and by publicly declaring opposition) have guaranteed more opposition than support for either option. It is likely that Johnston County is headed for a property tax increase.
I hear where you're coming from, dcobranchi
I just don't totally agree.
You think the proper way to build infrastructure is to borrow the money and make the new residents pick up an inflated tab. It's inflated because of the interest tacked on.
I don't really think that makes a whole lot of sense.
I'd rather see a sensible tax rate and a sensible TT imposed and a sensible budgetary plan for bringing in the right amount of money needed to build in the future. Using bonds for long lasting capital expenditures so that the bills are paid mostly by new residents isn't really a logical argument. Aren't we ALL going to pay the higher increase in property taxes that result from paying that interest on top of the cost of schools? Or do the tax rates go up only a smidge for long time residents and a more per unit valuation for new residents? Oh, right. That's illegal. Yes, indeed, we will all pay the higher increases in property taxes when we have 29 million in interest charges to pay back on top of the 100 million dollars worth of schools we build.
The TT gives us two things:
Besides all that, I personally believe two things:
Alvin Toffler
Now there's a blast from the ...future
Screw Alvin Toffler and his 21 st century neo-conism
Besides all that, I personally believe two things:* Leslie
1) A civilization flourishes when people plant trees under whose shade they will never sit. -- the Greeks
You have left out the 2 nd part...
A 2nd generation of Greeks will never sit under a tree that produces lighting like the stupid Romans do and expect their civilzation to last forever...
2) You've got to think about 'big things' while you're doing small things, so that all the small things go in the right direction. --Alvin Toffler
Alvin has only produce one small thing that didn't produce a big right thing in the end....He was the mentor of the former Speaker of House and the failed Republican revolution of 94 Newt Gringrich.
Dream on!
Gosh Max
Why so harsh on Alvin Toffler? Perhaps Faith Popcorn is more your style?
Designed to fail
They rushed this referendum because realtors and homebuilders want it to fail to use as a warning for other counties and Johnston County commissioners are cynically playing along.
You would think that an all-Republican county would already be the most fiscally responsible by conservative standards. Apparently not and, the county commissioners are not defending themselves against the bogus charge of having a "spending problem" and, as you note, they will not abide by any voter endorsement anyway.
Between the declared opposition of commissioners and the fact that, unlike other counties, you can find NO information about the proposed transfer tax on the Johnston County website the way is clear for well funded opponents to spread disinformation and drive a stake through the heart of this referendum.
Pure right-wing politics. Expect property tax increases.
You Said the Magic Word - The Duck Came Down
Note: The title is an obscure reference to the 1950s game show "You Bet Your Life" hosted by Groucho Marx.
there is a need for additional revenue for the infrastructure needs of rapid growth.
Bonds are needed during rapid growth because the tax base at the time will not support the additional expense of the infrastructure financially or politically (why should existing citizens pay the freight for people who are not taxpayers until some future date?). During rapid growth, it is not possible to pay everything that is needed out of current revenues. Just not possible without raising taxes dramatically.
The issue is not bonds, it is growth, which is why a transfer tax makes sense. The tax scales as growth increases, declines as a county is completely built out.
The realtors just want the income that results from growth without having to pay for the growth themselves. They are just another example of borrow and squander Republicans.
No growth, no bonds. It's that simple.
50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts
Agreed
And this is the problem. Johnston County Commissioners placed themselves (by campaign pledge) under a dangerous self-imposed property tax increase moratorium. That has done two things (I'm all about two things these days. ;)~ ):
We've revalued property a few times and hit long time residents very hard with very steep "covert" tax increases that way. That's made plenty of people mad. But, it is a good way to get old folks with lots of land to sell to developers, no? (/snark)
The second thing that moratorium is doing is the most dangerous. Every year we butt hard up against our max bondable value. We approved bonds this year and the School Board, because of rapid growth, will have to ask for more next year.
The Ugly Numbers [from the JCDP]:
Anybody who disputes Johnston County's need for a Transfer Tax is lying. They're not crazy. They're not being irresponsible. They're not being greedy. They're just lying. All you have to do is look at the numbers.
We'll still have to sell bonds but not as much. And if, God forbid, something happens and we have to build a new water plant or build a reservoir or something unforseeable, our bond rating won't go [down] (which would push the interest rate we have to pay higher) because our bondable valuation will be higher with a Transfer Tax in place.
[edited to correct the last paragraph]
I don't know where you're finding this information -
I'd like to find the same info on Moore County. We're in similar situation. Not only do we have an all (R) county commission, we have school bond issues AND a transfer tax on the ballot on election day. I just want to understand all of this.
Be the change you wish to see in the world. --Gandhi
One of our
2006 County Commissioner candidates, C.P. Thompson, put this together for the county party. CP was a building inspector in Johnston for eons and knows everybody. He got this info from the public records, though.
I think your county tax/finance office should be able to give you all the figures. You'll want to also find out from the school board how much it costs to build each different type of school in Moore County, etc.
Forgot to mention ...
that currently approved bonds plus interest due has Johnston tax payers repaying $700 million.