New Bonds Increase Your Taxes!

by: Ron C. West

On Monday, October 28th, 2002, I sat through the North Richland Hills City Council Meeting. The primary reason for my attendance was to hear the report of the Capital Improvements Study Committee to the council.

Mr. Charles Brinkley, chairman of the committee, made the report and included in his remarks that he felt that the proposals for $38.2 Million in new expenditures could be done without increasing the debt service rate. He didn't elaborate on that.

Later after the presentation, Councilwoman Johnson commented that she was pleased that they could consider the expenditures without increasing taxes. Unfortunately, that is just not true.

Hidden in the verbiage is the assumption that property values will continue to escalate at 3% or more per year and the increased tax revenue required will come from the increase in values if the city holds the current tax rates. In layman's language, the city is already planning to spend the money for new taxes from increased property valuations. Just since 1997, this has increased NRH citizens' property taxes by over 50%!

The council's intent is confirmed, and essentially hardened, by the goals for 2002 which indicates an intent to "hold the tax rate" - omitting the fact that this has been adding approximately 10% per year to property tax collections via valuation increases.

Fortunately for the council, most citizens are unaware that the council is planning to spend their money for the next 10 to 20 years without telling them truly what they are doing. The sitting city council (excluding only Tim Welch) authorized $6.45 Million in new debt in May of this year without even seeking voter approval.

By law, each bond issue requires a corresponding calculation of a percentage of the taxable base required for debt service and interest. There is no way to issue debt without this calculation under state law. Over a 10 to 20 year repayment period, you can anticipate that the pay back will be nearly double the money borrowed. The upcoming $38.2 Million will actually cost the taxpayers between $50 and $75 Million after interest and expenses are added in. The percentage calculated is then added to all other debt service to provide the required percentage to service all debt. There is no legal way to issue debt without increasing the taxes required to pay it back. Even if the council chooses to play games with the words "holding the rate" they are only being dishonest with the taxpaying public.

Let me repeat one time for emphasis - There is no way to issue any bonds or certificates of obligation without increasing the taxes required for repayment. Holding the rate after increasing valuations is increasing the taxes to pay for the bonds.

This brief article has been sent to all members of the North Richland Hills City Council for their review. The purpose of the information is to insure that no member of the sitting city council can claim to be able to promote or issue bonds or other city obligations without increasing your taxes.

The city council will soon present us with a very large barrel of pork, with all members of the "Capital Improvements Study Committee" pledged and obligated to support it as a new "Bond Package". The vote is tentatively scheduled to be in February 2003. I urge each citizen to look very carefully at each portion of the bond issue - if segregated - to see where all the pork really is. One item that was submitted is $2 Million for "unidentified street work". Another item is for new repair bays to work on city vehicles for just $1 Million. (It would be far less costly to contract all of this work to a local dealership.) It only cost tax payers $100,000 to install traffic signals for an intersection - what a bargain! Oh, did I forget to mention drainage improvements that should have been provided and paid for by developers? Only $4 Million more out of tax payers' pockets!

The bottom line is that each voter needs to pay attention. The upcoming bond issue will be added to everyone's tax bill for the next 10 to 20 years if approved. If you are an NRH tax payer, and our city council is not reigned in, this means that the pattern of approximately 10% per year property tax increase will double or triple your property taxes over the term of the bond issue they want you to vote for. To the council, a low voter turn out should insure passage of this new debt for the city and the tax payers.

This information is being written and prepared prior to the final decisions by the council of what they want to spend so it is subject to revision as we see what the final bond package is to be. Whatever it is, if passed, IT WILL INCREASE YOUR PROPERTY TAXES!