WEST BEND — A conservative estimate places interest cost for a $50 million referendum at about $35 million. The referendum funds would build a new Jackson Elementary and renovate parts of the West Bend high schools.
Baird director of public finance, Brian Brewer, estimated the cost using an interest rate of 4.75 percent. Market rates are between 3.5 and 3.75 percent. No action was taken by the board related to referendum information during the Monday meeting.
“I want to go into this conservative,” Brewer said. “I believe rates are poised to be higher than they are.”
That seems like a reasonable estimate. There are some other fascinating comments in the story. Like this one:
The Jackson fund was also discussed by the board and it was recommended by Bray Architects that it be used to pay down debt rather than reduce the referendum amount.
So rather than use the money that the district has been saving for years to pay cash for some of the building, Bray is recommending that we borrow it anyway. This is horrible fiscal management if the board takes their recommendation. It is always better to pay cash, if you have it, than to borrow the money and pay interest on it. Why would Bray recommend that the taxpayers pay interest on money they already have? because then Bray gets control over spending it.
Then there is this:
The amount of taxes paid for school debt will also reduce after debt from previous projects is paid of.
It is not clear if that is the reporter’s comment or if it is a summation of information given at the meeting. Most likely, it is the latter. It’s a nonsensical statement. The West Bend School District currently has about $130 million in outstanding debt. Our taxes are paying off this debt. If the taxpayers approve the referendum, that debt would balloon to about $205 million. That’s roughly $5,125 for every adult in the district.
The suggestion in that statement is that once we pay off some of the old debt, it won’t “cost” any more to pay the new debt. That’s BS. The debt is the debt and it must be paid. The fact that we pay off some old debt does not make the new debt any less. That would be like saying that buying a new car is free because you paid off the old car. That’s how the financially illiterate get themselves into trouble.