How can a $30.48 million capital improvement
project have no effect on the tax levy?
February 7, 2017 -
The proposed project will cost $30,483,850. The project will be
funded by $9,054,000 from the district’s capital reserve fund and
$1,343,184 allocated by New York State through the Smart School Bond
The remaining $20,086,666 from the local tax levy
would be bonded, and approximately $17 million of that cost will be
offset by state aid over 15 years.
The proposed project is timed so that debt service
from past capital projects will soon be retired. The estimated local
share to be paid by taxes for the new capital improvement project will
be approximately $171,058 less during most years than the local share
that is currently being paid on the retiring debt – thus resulting in no
impact to the tax levy for debt service.
Think of it as buying a new car: your current car is
almost paid off, and you purchase a new car with a monthly payment that
is equal to or less than your current monthly payment. You don’t feel a
difference in your bank account because you are continuing to pay the
same payment for your new car as you did with your old car.
State aid will not cover the entire local share in
fiscal years ending June 30, 2017-2019, and the district may use money
from its debt service reserve as well as building aid and appropriated
fund balance to ensure that the project does not affect the tax levy
during those years.
The project will be paid with bond anticipation notes
(BANs) for the first three years beginning in 2018, and will then be
bonded for 15 years from 2021-2036.