Borrowing without taxpayer permission could raise costs 20 percent

Although Wake County projects enrollment to grow just 0.7% over the next six years, commissioners still plan to borrow money for school construction this year. They plan to do it without a vote of taxpayers, which would mean a 20% larger tax increase to cover higher interest charges.

Wake County voters approved a billion-dollar bond package for schools, community colleges, and parks in 2018, which led to a 3.8-cent property tax increase this year. County officials had planned additional bond votes in 2020 and 2022 for total borrowing of $1.7 billion.

Last week, county staff presented a way to cover the borrowing plan with an additional 2.45-cent property tax increase in 2022. Commissioners instead are leaning toward a plan that would borrow money this year with a limited obligation bond that forgoes a vote of the people to pledge tax revenues. Without the full pledge of tax revenues and the demonstrated support of voters, this financing plan will require a 2.95-cent property tax increase, 20% higher than the original plan, to generate an extra $2 million more each year.

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...

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