Wake may delay its next school bond vote until 2022. That would cost taxpayers more.
Wake County voters might not be asked to approve a school construction bond referendum this year, even though that would mean using a more expensive way to pay for school projects.
Wake County staff recommended Friday waiting until 2022 to put the next school construction bond referendum on the ballot because of how many items already will be on the November 2020 ballot. Instead of a bond referendum this year, officials want to use an alternative borrowing method that would cost a 1/2 cent more on the property tax rate.
Commissioner Vickie Adamson said that 1/2 cent difference would only mean $15 more a year in property taxes on a home with a $300,000 assessed property value.
“The difference is basically no cost to homeowners, which we love,” Adamson said at Friday’s retreat planning meeting.
Wake County voters last approved a school bond in 2018, when they overwhelmingly backed borrowing $548 million. That year, voters also approved borrowing $349.1 million for Wake Technical Community College projects and $120 million for parks, open space and recreation construction.
School population growth slowing
Growth has slowed since 2018 in the Wake County school system, with planners pointing to issues such as an aging population, fewer children being born and competition from other school options. Enrollment projections released this week have the district growing by 33 students this fall and 1,177 students by fall 2026.
But school leaders say there are still many older schools that need renovations. They also point to how some areas lack seats because growth is still occurring there.
“Our school buildings that the taxpayers have paid for are still going to age,” Greg Ford, chairman of the Board of Commissioners, said in an interview. “They need to be reinvested in to make sure they are at the standards we want students and teachers to have. We still have to build schools in high-growth areas.”
Under state law, Wake County can only hold bond votes in years with an election where all the polling places are open at once. During odd number years, individual Wake cities and towns don’t all vote on the same day.
This means that if there’s no bond vote this year then county leaders would have to wait until 2022.
In 2016, the school system and county agreed to create a seven-year construction program that’s updated annually, The assumption had been that there would be a $594 million school bond referendum on this year’s ballot.
Different options to pay for school construction
The county has the option of using general obligation bonds, which require voter approval but have lower interest rates because the borrowing is backed by the county’s taxing authority. Another option is to use limited obligation bonds, which don’t require a referendum and are backed by county assets, making them more expensive.
County staff say that using the limited obligation bonds would result in “minimal cost difference” of a 1/2 cent more on the property tax rate beginning in 2024. They also say there would be no difference in the amount of money available for school projects.
If a bond referendum was held this year, county staff said there would be “ballot crowding” in November because of the presidential, state and local elections. Raleigh may also put housing and parks bonds on the fall ballot.
Commissioner Sig Hutchinson said the cost difference between the two options is minimal and that not putting a school bond on the ballot would help Raleigh’s bond efforts.
“We are part of a county with partners and particularly with the City of Raleigh, I think they have been great partners with what they’re trying to do,” Hutchinson said. “I think that’s important in terms of giving them the greatest opportunity to be successful.”
Ford said that he’s also leaning toward using the limited obligation bonds. But he said that helping Raleigh should be secondary to making sure that the school needs are met.
“We do want to be mindful of similar efforts of our municipal partners doing things that are in line with our goals like affordable housing and parks and open space,” Ford said. “But in my opinion, I don’t know that this decision should be based on what one municipality or another is going to do.”
Commissioners agreed Friday to hold on a decision until March. This will give them time to talk with the school board first.
“We want to make sure our colleagues on the school board are comfortable with the budget assumptions, that we can cross-check the capital needs as we see them and just make sure we’re all on the same page,” said Ford, a former Wake principal.
