Bond issuance is a complicated matter, and
indicating how much this is going to cost you is equally complicated. Adding to
the confusion is that fact that the ballot language
for Issue 14 indicates a millage of 1.91 mills. Where did that number come from?
We are saying that our bond levy is "no additional millage", but the ballot is
saying 1.91 mills. Here is the explanation.
Bond issuance is a complicated matter, and indicating how much this is going to cost you is equally complicated. Adding to the confusion is that fact that the ballot language for Issue 14 indicates a millage of 1.91 mills. Where did that number come from? We are saying that our bond levy is "no additional millage", but the ballot is saying 1.91 mills. Here is the explanation.
First, the 1.91 figure is merely an estimate. The auditor doesn't know what the millage will be because the timing of the bond issuance and the interest rates in effect at the time are up to the Board of Education. For example, in an extreme case, the board can decide not to issue the bonds, and then the millage would be 0.
Second, the bond issue is "no additional millage", meaning that we have committed that you will not pay more than you are paying now, which is 3.8 mills. The auditor's estimate does not take into account the fact that millage to pay for previous debt will be dropping off your tax bill in Calendar Year 2013, nor can the auditor know the effect of the refinancing of the previous debt and the use of premium bonds, all designed to lower the tax rate for existing taxpayers.
Still, Worthington Taxpayers want to know where the 1.91 mill figure comes from. Fair question. Here is the calculation:
|Worthington City School District|
|November 7, 2006|
|PU Personal Property||28,515,800|
|Amount of Bond||$ 37,500,000|
|Average Interest||$ 900,000.00|
|Average Annual Debt||$ 3,400,000.00|
|Average Millage Required||1.9093|
The formula and the assumptions for calculating the millage that appears on the ballot is in section 133.18 of the Ohio Revised Code. Those assumptions, at least in our case, are wrong, thus the millage amount is incorrect, but let's go through the formula anyway.
Class 1 property is the total value of every piece of real estate in the district, including both residential and agricultural. Class 2 property is the total value of every piece of industrial and commercial property in the district. PU Personal Property refers to the value of Public Utility property in the district. Together, they add up to a total value of 1.780 Billion dollars. One mill of property tax therefore generates about 1.78 million dollars.
The amount of the possible bond issuance is 37.5 million dollars. Assuming (incorrectly) that we issue the entire bond amount immediately and pay them off in equal chunks, we get principal payments of 2.5 million dollars/year (37.5 / 15 = 2.5). Assuming (again, incorrectly) interest payments of 4.5% and remembering that interest payments will decline annually as principal is paid off, we have an AVERAGE interest payment of 900K. A principal payment of 2.5 million and an annual interest payment of 900K means a total payment on this debt of 3.4 million per year. Since one mill generates 1.78 million dollars, the average millage per year is 3.4 million / 1.78 million, or 1.91 mills.
The Worthington Taxpayer should note that even if this was correct, your millage would be reduced by 12.5% because of the various rollbacks in existing Ohio law.