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Half cent request raises more questions PDF Print E-mail
Wednesday, 11 September 2013 10:13

By Giseelle Arredondo

• Leader & Times


The Liberal City Commission meeting Tuesday evening involving a financial request from the USD 480 Board of Education led to more questions than answers.

According to USD 480 Board of Education President Delvin Kinser, the financial request has already been talked about in the past.

“The joint meeting of USD 480 education presented you all with an opportunity. An opportunity to partner with the Liberal schools and its good ol’ future for our kids and the community at large,” he said.

“As you know that partnership involves the city being willing to go for a percentage of its sales tax authority for the purpose of partially funding the net service on a school bond issue. We showed you how the partnership would not only benefit USD 480 efforts, but also enhance the city’s ability to expand economically and to attract new business and industry.”

The school board made a request for a half-cent sales tax and that the tax be in effect for the life of the bond.

“On behalf of the USD 480 Board of Education, we call on the commission to allow the people of Liberal to vote to approve a half-cent sales tax to be earmarked for bond’s repayment. We also ask that the tax be in effect for the life of the bond, which we believe be no longer than 25 years – possibly smaller, a smaller amount of time, depending on the scope of the project,” Kinser said.

Charts were then handed to the commission to look at, with several examples that used different colors: blue, red and green.

“On the front page, the breakdown with the bond was $150 million – we don’t think we are going to be running a $150 million bond issue for the people of Liberal – we wanted to put a number on the top. And the last one is for a $50 million bond issue,” Kinser said.

“The green represents property tax. The red represents the state contribution. Right now, on a state contribution on a bond, the state would pay 51 percent of our bonds. If our school population projections come out as we anticipate, the state’s contribution could even increase to as much as 55 percent, but currently it’s 51.

“The blue would be the sales tax portion based on a half-cent allocation for the life of the bond. On the $150 million bond issue, on the $135 million, on the $100 million, on the $35 million, on every one of them you’ll see that the sales tax portion will stay low. Sales tax portion will not increase significantly over the life of bond. What that half-cent will do is give us a baseline,” he said.

“You can see that the overall size of the project really doesn’t matter. We are formulating a plan as we speak. We’ve still got some more work to do, but we’re getting there. No matter the size of the project, the portion that would come from sales tax would stay at a consistent level.” Kinser continued.

“If we don’t have sales tax, this particular bar graph shows us what we’re looking at. Again, you have the 50 percent match from the state. The rest would be taken up by USD 480 property owners,” he said.

“We believe that the people of Liberal want to improve our school facilities. They want the needs of our children met, but they also want to take advantage of Liberal’s uniqueness. By putting a mechanism in place to have those who come to Liberal to work, play, buy groceries and everything else, to help carry the load of funding, our schools improve,” he added.

Kinser asked the city commission to give them the authority to use a half-cent of sales tax authority, and it would go to the retirement of the bonds, where – just to clarify – there would be two questions on the ballot.

“One would be for the approval of a bond issue. The other would be for the approval of the sales tax portion,” Kinser said. “Should the sales portion pass and the bond issue fail, there would be no obligation on the city. The sales tax would only go into effect depending on the bond issue passing. If the bond issue would pass and the sales tax fail, then it would be up to us (USD 480) to find other methods to pay for it.”

Commissioner Joe Denoyer replied, “Why are we rushing? This is still a blank check.”

Kinser replied, “Well, we are on a timeline. Just the virtual process – getting an election together in time for April – We want to have an election soon. We studied this as a board, and we think this would really be beneficial to everyone who lives in Liberal. We don’t view it as rushing. We are still in the process of formulating what it’s going to be.”

Denoyer said, “For the life of the bond, which could run up to 25 years... for a special project, 10 years is the max, not 25. The other thing that disturbs me, where’s the line when people stop shopping here and go elsewhere? They’re (people of Liberal) afraid that we have reached that line, and that we’re losing people now because of the raised mill levy this year. Car dealers are leery of another sales tax.”

Vice Mayor Janet Willimon said, “It just seems so sudden, so fast. We had a meeting a couple weeks ago, and we asked for a plan, and I guess this is it. You’re wanting to blank check it right here under $50 million?”

Kinser said, “We’re still working on the scope. It’s my hope that we’ll know the scope by the end of the year.”

Willimon said, “You’re asking tonight for one half of a percent for the life of the bond? That’s what you’re asking?”

Kinser replied, “Right, and that sales tax total to pay off those bonds, we would have it for a 25 year period. If it’s a $135 million project or if it’s a $50 million project – no matter what the size of the project is, the sales tax amount of dollars coming from the sales tax will be the same. Too ambitious or if it is not ambitious enough, that is really a separate question. The question is can the city spare a half-cent?”

Mayor Dave Harrison asked, “How did you provide a half a cent instead of a full cent?”

Kinser replied, “Looking at that as a board, we felt that a half-cent is fair. We didn’t want to come  and say, ‘Hey, give us all your taxing authority, because you’re going to have needs in the picture.”

Harrison asked, “What do you mean by ‘fair?’”

Kinser replied, “We felt that if we have a half cent, we can manage then. We can manage a bond issue on a half-cent sales tax. There were some board members that wanted to ask for a whole cent.”

Commissioner Dean Aragon said, “You said the life of the bond is 25 years, and Joe says it’s 10 years. Is there any way it can’t be refinanced in 10 years?”

Kinser replied, “Well, our bond will be 20 to 25 years, regardless.”

At the end of the discussion, Willimon said that she was “not very comfortable, would like to leave the door open for discussion.”

Denoyer said, “We are on the right track. Just not tonight. Until we have more specifics.”

Kinser replied, “Thank you for your time and consideration.”

There will be more coverage on the request of USD 480 at a meeting at noon in two weeks from Tuesday at First National Bank.

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