NO CONTEXT OR BALANCE IN THE CITY’S PRESENTATION – One of the most glaring examples of the one-sided approach in the city’s portrayal of the bond issues is the failure to provide sufficient context for the consequences of the expense, if they are passed. Granted, the materials point to a 5.7-cent property tax rate increase, if both bond issues are enacted; entirely missing, however, is information to put that increase in the tax rate in a neutral context. For instance, the practical impact of 5.7-cent rate hike is an approximately 11.787-percent increase in the city’s property tax rate, which currently stands at 48.36 cents per $100.
As noted by U.S. Supreme Court justice William Brennan, Jr., when he was a justice of the New Jersey Supreme Court and which was cited by the North Carolina Court of Appeals, “But a fair presentation of the facts will necessarily include all consequences, good and bad, of the proposal, not only the anticipated improvement in educational opportunities [the bonds at issue were for a school board], but also the increased tax rate and such other less desirable consequences as may be foreseen.” [emphasis added]
EXAMPLES UNDERSTATE REAL TAX IMPACT ON BURLINGTON RESIDENTS – In fact, in FAQ Number 3 on the city’s website is this statement: “This means a home estimated at a value of $100,000 would see an increase in the monthly tax bill of $4.75.”
First, the narrative part of the example includes only the “monthly tax bill” impact; but property taxes aren’t paid by the month, they’re paid on an annual basis; the cumulative, total annual amount should be included here (as it is later in an accompanying table). The bond order, itself, makes clear the actual, annual cost; all of the city’s materials should do so, as well.
Secondly, as council member Dejuana Bigelow noted during Monday night’s work session, a more relevant point of comparison would be the impact on an average Burlington home. For a truly fair illustration, the city should consider including the impact at other price points: homes valued at $200,000, $300,000, or perhaps other valuations, as well. Additionally, there is absolutely no mention of the impact on Burlington business owners, whose property values are often even higher – and thus the property tax impact – will be even more significant.
MISSTATEMENTS ABOUT RELATIVE MERITS OF FINANCING OPTIONS – FAQs 3, 4, & 6 alternatively exaggerate, and minimize, the financial impact from issuing the bonds.
FAQ 3: “Interest rates on municipal bonds fluctuate with the market but tend to remain lower than other types of debt. Debt payments are also spread out over 20 years, so the cost is shared by current and future property owners. When these and other factors are taken into consideration, actual debt repayment terms are expected to have a minimal impact on the final monthly costs to taxpayers.” A minimal impact: how so? That’s not consistent with the 5.7-cent additional annual property tax per $100 valuation needed to finance the bonds.
FAQ 4: “G.O. bond financing advances important projects at the lowest possible cost.” Not true. The lowest possible cost – i.e., with no debt repayment whatsoever incurred – would be to proceed, as with most city spending, on a “pay-as-you-go” basis, which means in this case setting aside funds for these projects – either in the current fiscal year, or to plan ahead for the future.
FAQ 6: “The City’s leaders believe that general obligation bond financing will accomplish the goal of advancing important projects at the lowest possible cost.” As previously stressed, the lowest possible cost is to finance projects without any interest expense.