Why owe $2.3 billion for bonds when revenues from bond sales are nearly the same as the cost of debt service?
At its most recent meeting, on October 7, 2003, the Board of Directors of the Fairfax County Taxpayers Alliance approved a resolution urging voters to defeat the upcoming 2003 school bond referendum.
Because of excessive bond sales, Fairfax County's revenues from annual bond sales are about the same as the cost of debt service. New bonds should not be sold until all old bonds have been paid off. Instead, Fairfax County has been selling bonds every year. The result is that county taxpayers owe $2.3 billion, or $6000 per household, for bonds whose revenues have not been much greater than the cost of debt service. (See chart, below.)
Arthur G. Purves, president of the Fairfax County Taxpayers Alliance, stated, "The principal reason for the chronic underfunding of school construction is the reliance on bonds. Because of the high cost of interest, there have never been enough bond revenues for the schools' capital improvement plan. The school board could spend much more on buildings if it paid for capital improvements on a 'pay-as-you-go' basis from the school operating budget."
Due to interest expense, bonds increase the cost of a new school by fifty percent.
While school construction has languished over the past thirty years, the schools' operating budget has soared. Inflation-adjusted spending per student has more than doubled and staff has increased nearly four times faster than enrollment. Instead of increasing staff so much faster than enrollment, the school board should have allocated the extra operating revenues to building construction and maintenance.
A link to the FCTA resolution against the bond referendum is posted on the Fairfax County Taxpayers Alliance website, www.fcta.org.