Break free from debt in the West Bend School District

Here is my full column that appeared first in the Washington County Daily News.

Nothing quite strangles a person, family, community, or nation like debt. Whether it is credit card debt, student loan debt, medical debts, the national debt (now a crushing $22 trillion), or school referendum debt, it not only drains resources in the present, but it robs the future of its choices. Debt is the master who brokers no dissension or leniency. Debt must be served before all others. Why then, does the West Bend School District want to saddle the taxpayers with another generational debt when they are so close to being debt-free?

One of the ways that credit card companies, car dealers, student loan companies, and other people who make money off of your debt sell their products is to focus on the payments instead of the actual debt. By taking a $50,000 car and stretching out the loan to 10 years, suddenly a person earning $30,000 per year can “afford” a really nice car. That works great until it is year eight, the car needs expensive repairs, and there are still two more years of payments due.

This is exactly the misleading game that the West Bend School District is using to sell a massive debt to the citizens. In April, the citizens will be asked to approve borrowing $47 million for a new Jackson Elementary school and revamping parts of the high school. It will cost approximately $74 million to repay the $47 million loan.

One of the selling points for the referendum is that it will “only” cost an additional 13 cents in the annual property tax mill rate to buy shiny new buildings. The mill rate is simply a term that gives the tax rate per $1,000 of property value. So if you own a home valued at $200,000, the 13 cent mill rate increase would cost you $26 per year. That seems cheap, right? “Less than a cup of coffee a month,” the advocates will tout. “Can’t you spare a cup a coffee a month for the children?” And so it goes. We have seen the arguments before. But let us look at the math.

If you add up all of the property in the West Bend School District, it has an aggregate value of $4,720,140,099. A 13 cent additional mill rate would generate $613,618.20 in additional tax revenue per year. How long does it take to pay off a $74 million debt at $613,618.20 per year? Even allowing for moderate annual increases in property values, it would take over 100 years to pay off the debt. How is the West Bend School District going to pay for the fancy new schools with only an additional 13 cents in the mill rate? What sort of financial sorcery is this?

The answer, of course, is that it will not cost just an additional 13 cents in the mill rate. It will cost much, much more. In the current tax levy, the taxpayers of the West Bend School District are paying a $1.01 mill rate to pay off the old referendums passed in 2009 ($27.4 million) and 2012 ($22.865 million). For that same $200,000 house, the homeowner is paying $202 per year just to pay for debt issued in the past decade.

The old debt is being steadily paid off and will be completely paid off by 2028 — nine years from now. Some of that debt begins to be paid off this year. In short, if the citizens vote against the referendum, they will see this portion of their property taxes decrease starting next year and will be eliminated in less than a decade. If the referendum passes, the district will simply redirect that money to the new debt.

The notion that we can pay $74 million in debt with a 13 cent mill rate is ludicrous and to claim so is intentionally deceptive. The truth is that it is not only a tax increase, but forgoing a sizable tax decrease. However one manipulates the mill rate, $74 million is still roughly $1,850 for every adult in the West Bend School District. That is a lot more than a cup of coffee.

Getting out of the debt cycle is a choice. It starts at home by paying off old debt while resisting taking on new debt. It starts in the West Bend School District by paying off the old referendums before passing new ones. Instead of stacking debt on top of debt, the citizens of the West Bend School District should break free of the debt trap and vote “no” on the referendum on April 2.