Recently, the district has been asked to respond to some new questions about the building addition and the March 17 referendum. Please review.
The March election features primary contests. Do I have to declare a party in order to vote on the referendum question?
According to the Mason County Clerk’s Office, those individuals who want to vote on the referendum but not the party primary contests can ask for a “Non-Partisan Ballot”. This ballot will only have questions that are not tied to the political party primary contests.
The question on the ballot is lengthy. It includes a phrase that states that my taxes could go up if there is insufficient alternate revenue to pay the bond and interest payments. Are my taxes going to go up?
So while property taxes are included in the question, the district has sufficient funds to pay this bond issuance without raising the tax rate. The question is lengthy because it includes a description of the sources for the funds that will be used to make the new bond payment. Alternate bonds require that a district pledge 125% of the expected bond and interest payments in the event that the first source of funds falls short.
The referendum question states that the district will use sales tax revenue from the 1% County School Facility Sales Tax (CSFST). It also identifies that the district would use the Personal Property Replacement Tax as a backup.
By Illinois statute, the last phrase in the question must be included in the ballot. By law, the revenue pledge required by the proposed alternate revenue bond must be backed up by the real estate taxes. It does not, however, require that a district use any real estate taxes to fund the bonds as long as the district has adequate revenue to pay the bond and interest payment. In this case the district has pledged, as the question states, two sources of revenue that total over $550,000 annually. The expected bond and interest payment is about $300,000.
How will the project be paid for?
The most recent project cost estimate is $7.3 million. The district will pay for the project using a combination of current fund balances and the sale of Alternate Revenue bonds.
The District has existing fund balances that can be used for the purposes of school construction. At this time, the Board is considering using approximately $3 to 4 million of district funds. If the Board uses $4 million of current district funds, the remaining construction costs are estimated to be about $3.3 million. These funds would be raised through the sale of the Alternate Revenue Bonds.
In this case, the district would sell bonds that are paid for by the 1% facility sales tax. Sales tax revenue can only be used on facility improvements such as new construction, renovations, and additions.
What are the chances that there are not “sufficient funds” to pay the alternative bonds? What happens then?
The district receives sales tax from both Mason and Logan counties, with the bulk coming from Mason County. While sales tax revenue can fluctuate, it is important to remember that we will continue to receive some amount of sales tax revenue. It will not fall to zero.
The Corporate Personal Property Replacement Tax (CPPRT) has been in existence since 1979. Like the sales tax, the revenue from this tax can change, but the district will continue to receive funds. Over the past eleven years, the district has never received less than $211,000 from this tax. The CPPRT will serve as the back up to the sales tax revenue.
Real estate taxes are required by law to be a backup. In Illini Central’s case, there are two layers of revenue that can serve as a backup before an increase in the tax rate would be considered.
First, the district has strong fund balances that could absorb the possibility of not meeting the bond and interest obligation. Second, the district could pay the shortfall with revenues that are generated by the current tax rate. The budget would have to be re-prioritized to meet this need.
In summary, the bond and interest obligation will be funded through the CFST. In the unlikely event that the sales tax revenue falls short, then the CPPRT would be used. In the unlikely event that the district still needs revenue, the existing funding balances and general budgeting priorities would be employed before a tax rate increase would have to be considered.
How long is the repayment period for the bond?
That will depend on the amount of money generated by the bond issuance. The question asks for approval to sell a maximum of $4 million in alternate bonds. That issuance will result in about a $300,000 bond and interest payment payable for 20 years. Any amount less could reduce the annual payment or the length of payment period. For instance, if the board issues only $2 million in alternate bonds, the bond would be paid for in nine years.
Does the district currently carry any bond debt?
Yes, the district currently is paying for one bond issuance. That issuance is paid through a property tax levy that totals about $395,000 annually. That results in a tax rate of about $.43-$.45 annually. It will be paid off in December of 2023.