"Citizen Information" flyer omits cost of debt
Fairfax County Taxpayers Alliance president, Arthur G. Purves, today urged citizens to vote against the $325 million County bond referendum on Nov. 2. He accused County leaders of withholding information about the County's debt in the County's "2004 Bond Referendum Citizen Information" flyer. This flyer was printed and mailed, at taxpayers' expense, throughout Fairfax County. While the flyer purports to present both "pro" and "con" arguments regarding the referendum, it omits the real reasons for opposing the bonds.
First, bonds are not cheap. The flyer, in answering the question "What is the cost of borrowing?", cites low interest rates but omits saying that the cost of interest is almost half the amount of the bond. So in selling $325 million of new bonds, taxpayers will pay an additional $160 million in interest, even with low interest rates and a Triple-A bond rating.
Second, in answering the question, "Will these bonds cause a tax rate increase?", the flyer omits saying that the County now owes over $2 billion, payable over 20 years, on bonds already sold. It omits saying that this year taxpayers will pay $234 million in debt service (the cost of interest and principal for bonds already sold). It does not say that this amounts to 16 cents of the County's $1.13 real estate tax rate.
Third, the flyer omits saying that for years revenues from annual bond sales have been about the same as the annual debt service. This year, for example, Fairfax County expects to raise $221 million from bond sales, while it expects to pay $234 million for debt service. Also, interest cost for selling new bonds will add $100 million to the County's $2 billion debt.
For at least twenty years, annual revenues from County bond sales have been about the same as the annual debt service. If it had not sold bonds but had used the debt service money for roads and buildings, Fairfax County would have had nearly the same amount to spend and would not have any debt. The County could have used "pay-as-you-go" financing but has instead accumulated a $2-billion debt selling bonds.
A pdf file of the "Citizen Information" flyer is avaialble at www.fairfaxcounty.gov/opa/bond/bond2004.pdf.
Paid for by the Fairfax County Taxpayers Alliance