Mt. Diablo school trustees' plans to break their 2010 election promise by hiking bond tax rates by more than 50 percent should anger property owners who were lied to.
This sort of deception results from lax rules statewide that plague bond elections to raise money for school construction and parcel tax elections for operating funds. School officials across California should be embarrassed by their sleazy sales tactics, and county attorneys should stop providing shoddy ballot analyses that enable this behavior.
Meanwhile, voters currently facing school bond measures in Dublin and Antioch or parcel taxes in the Hayward, New Haven, West Contra Costa and Peralta Community College districts should know their ballot materials are also incomplete.
It's important to remember bonds are not free money; they are a form of borrowing similar to a home mortgage. When financing a house, one usually knows the length of the loan. A longer term means paying more interest. One usually also considers other financial obligations.
But voter information for school bonds doesn't include basic information. The loan length is not specified. Nor is any estimate of the interest costs. And, for bonds or parcel taxes, there is usually no mention of previously approved measures in the same district.
School officials know these numbers, or have good estimates. But it's easier to sell tax hikes to voters who are kept in the financial dark.
Mt. Diablo officials took a different, but more troubling, approach for their 2010 bond measure. They told voters about still-outstanding bonds from a 2002 election. But they made a promise during the campaign, in interviews with our editorial board and in the official voter guide:
"The combined annual tax for these bonds and the District's Measure C bonds approved by voters on March 5, 2002, is expected to be no higher than $60 per $100,000 of assessed valuation."
This was a key campaign strategy. The $60 rate was the limit for just the 2002 measure. They were saying that limit would now apply to both measures combined. In other words, property owners would not face tax-rate increases.
But the district hid its plans to back-load payments for the second set of bonds. They would borrow money now but, to stay within the limit, they would pay most of it back after 2030, after the first bonds were retired.
The delayed repayment would lead to huge interest costs that weren't mentioned. The district didn't reveal in ballot materials that its forecast called for a 43-year repayment schedule on the new bonds, resulting in interest costs 4.4 times as much as the principal. For comparison, the typical ratio today for a 30-year home loan is roughly 2-1.
It was stupid, as I pointed out then and this paper editorialized.
Last week, school trustees unilaterally reneged. Without going back to the voters, they plan to restructure the repayment schedule. That means property owners will have to pay much more now. Tax rates will immediately jump to $89 per $100,000 of assessed value, and in the next few years will reach about $95.
The owner of an average single-family home in the district, assessed at $289,000, will face an increase from $173 a year to $275. Owners of costlier homes will confront larger increases.
The district's attorney says that boilerplate ballot language allows this. Maybe, maybe not. Even if that were true, this is not what the district promised voters. Trustees should be ashamed.
The district has two alternatives: Slow down borrowing to stay within the original promise, or go back to voters for the rate increase.
If the district had been honest to begin with, if it had been required to disclose all the basic information, it would have never made the original promise.
It's time for state lawmakers to require meaningful disclosure because school officials can't be trusted.