School ofﬁcials call measure ‘devastating’
Vail CO Colorado
EAGLE COUNTY, Colorado – School officials are still very concerned about Amendment 61.
“It would be devastating to all organizations that run on taxpayer money,” said Eagle County School District Superintendent Sandra Smyser.
Amendment 61 would make sweeping changes to the way state and local governments can use and issue debt. Voters will see the amendment on the statewide ballot in November.
Two other provisions of the law have school officials especially worried. If a school district borrows money, the law requires the district to cut property tax rates after the district pays down the debt. The district would have to cut the tax rate by the amount of the average annual debt payment.
For example, suppose the district borrowed $20 million at a 5 percent interest rate and paid off the loan over 20 years. Say the district’s annual payment on that loan is $2 million. At the end of the 20 years, the district would need to cut its property tax rate so the district received $2 million less in revenue, said district Chief Financial Officer Phil Onofrio. That rule applies even if the school district didn’t raise taxes to borrow the money in the first place.
Secondly, the amendment would do away with the state’s no-interest-loan program. The school district borrows about $20 million each year from the state through that program.
If the district had to borrow that money at, say, a 5 percent interest rate from a bank, the district would spend an additional $1 million each year on interest – or a total of $20 million over the course of a 20-year loan, Onofrio said. That’s on top of the $2 million the district would lose because it would have to cut its property tax rate at the end of the 20 years.
As a result of losing all that money, the district would have to cut its expenses, school officials say.
“I think it would make the budget cuts we’ve already done look minuscule,” Smyser said.
School officials have been invited to a presentation the Summit School District is hosting June 22 in Breckenridge on proposition 101 and amendments 60 and 61.
Eagle County School Board member Brian Nolan says the district should look into all possible options in case amendment 61 passes. He suggested the district consider selling some of its properties and putting that money in a special reserve fund. That fund could cover the money the district would normally borrow through the state’s no interest loan program.
Onofrio said the district encounters a cash flow problem each year because the school years and property tax payments don’t line up. The school district gets about $45 to $50 million each year in property tax revenue, which comes in March, May and June, he said. By the end of the school year June 30, the district usually has about $20 million left. Because the district spends about $4.5 million of that money each month on teacher salaries, benefits and other operating expenses, the district runs out of property tax revenue around October of each year, he said. To make payments on operating expenses between October and March, the district borrows about $20 million from the state through the no interest loan program, Onofrio said. The district pays the state back once property tax revenues start flowing again in March.
Staff Writer Sarah Mausolf can be reached at 970-748-2928 or email@example.com.