Simple Math Explains Mind-Boggling Tax Jolt With AISD’s $2.44 Billion Bonds

By Bill Oakey – October 27, 2022

Being a taxpayer and affordability advocate can be a frustrating pursuit. What if I learn something so shocking that nobody believes it? The answer is this – I refuse to give up! After slicing and dicing numbers throughout a 35-year accounting and auditing career, I know a thing or two about numbers. Check this out, and you can easily understand why I find it so shocking.

Simple Math Question – What Is $2.44 Billion Divided By $350 Million?

Answer: $2,440,000,000 / $350,000,000 = 6.9

That rounds off to 7.

Now, let’s put that number 7 into perspective. Let’s turn that simple math problem into a word problem: How many years would it take, if AISD spread their $2.44 billion into annual bond elections of $350 million each?

The answer is 7 years.

Why did I choose the annual figure of $350 million? Because, during the election that voters are deciding right now, the City of Austin has a $350 million bond on the ballot for affordable housing. That is the highest amount we have ever had at one time for affordable housing. The taxpayer impact might not be too shocking, just for that amount alone.

But, what if we had a $350 million dollar bond election every year, for 7 years in a row? Would that make you a little bit uncomfortable, as a taxpayer? Well, get this folks – AISD is asking for 7 times that $350 million – right now…all at once…this year!

And, we are being told that the taxpayer impact is nothing to worry about – just a one-penny increase in the debt service portion of their tax rate.

But, let’s keep something else in mind here. AISD has a smaller tax base than the City of Austin. That means that there are fewer taxpayers to share the burden. Haven’t we heard a few people say that we are in an “affordability crisis?” That tiny one-penny tax impact that AISD advertises may be true in the first year or two, as a small, initial amount of bonds are sold, But, you can’t finance $2.44 billion throughout the life of all the bonds, without raising taxes much higher within a few short years.

Now, let’s put this whole thing into perspective. ACC has a $770 million bond issue on the ballot. How many $350 million chunks are being put to the voters all at once, stacked on top of each other…this year…right now…in the current election?

1. City of Austin – 1 $350 million chunk

2. ACC: $770 million – over 2 $350 million chunks

3. AISD: $2.44 billion – 7 $350 million chunks

Total = $3.5 billion – 10  $350 million chunks

What Can We Do If This Message Is Ignored, And All of the Bonds Pass?

I have a good solution in mind. Public officials and other influential folks could conceivably work with AIISD to evaluate the taxpayer impact, going forward. Maybe they could spread out the issuance of these bonds over a longer period of time. I would suggest that they reach an agreement on a specific timetable for issuing the bonds, to spread out and soften the taxpayer impact. They could review several different scenarios, and decide on a feasible and sensible approach, that does not severely impact affordability for homeowners, renters and businesses.

$3.5 billion is the highest amount by far, for any bond election in Central Texas history. And it is about to flash right by, with hardly a whisper from anybody. I could not resist speaking out about this. Numbers don’t lie. But, they have been known to stare people in the face, and jolt them awake. That happens to me all the time. Right now, it means that I need a nice, hot cup of coffee. Have a nice day, and don’t forget to pay your utility bill…

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1 thought on “Simple Math Explains Mind-Boggling Tax Jolt With AISD’s $2.44 Billion Bonds

  1. cthielem

    Nice work Bill. And, as if the past repeats itse’f (and it always does), in a few years, maybe 3 – 5, there will be ANOTHER bond referendum by one or more of our taxing entities adding even more to our local taxpayer burden.

    Reply

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