How to help voters understand the tax implications of new debt

Do North Carolina local authorities make clear enough the tax implications of borrowing? State law requires ballot referenda  to include language authorizing payment of bonds and interest and “providing that additional taxes may be levied in an amount sufficient to pay the principal of and interest on the bonds be approved.”

In Minnesota, the ballot question is simply about the bond, but authorities must “explicitly note the property tax implications of voting yes on bond referenda in bold capital letters on a ballot.” For new school bonds, as an example, the ballot would state

PASSAGE OF THIS REFERENDUM WILL RESULT IN AN INCREASE IN YOUR PROPERTY TAXES.

A new paper comparing school bond approval in Minnesota and Wisconsin, which does not have any requirements about property tax implications, found “when the property tax implications of voting yes are more salient, the fraction of voters favoring bond passage declines by approximately four to seven percentage points and the probability of bond passage falls by approximately ten percentage points.”

 

Joseph Coletti / Senior Fellow

Joe Coletti is a senior fellow at the John Locke Foundation focused on fiscal policy issues. He previously headed the North Carolina Government Efficiency and Reform initiativ...

Reader Comments