School Bond Tax Rate Hike Is $1.80

(LAST OF A SERIES) This is probably one key question in the minds of Ann Arbor School District voters these days - how much is the $15,525,000 bond issue going to cost? According to Business Manager George Balas, if the issue is approved, it would mean a tax increase for Ann Arbor homeowners of about $1.80 per $1,000 of locally assessed valuation. For the average Ann Arbor homeowner, whose house is locally assessed at $5200 (which means the market value is about $20,800) this bonding issue will result in an increase in his taxes of approximately $9.33 per year, over a five-year period. The $9.33 net increase also takes into account retirement of past bond issues. The average cost would be higher than $9.33 w w - - in fact, it would average about $16.20 per year over the next five years - for this bond issue alone. Because the Board of Education plans to sell part of the bonds in 1968 and the remainder in 1969, this $9.33 figure is only an average of the cost per year over a five-year period. The cost would be greater or smaller in a particular year, depending on which years the bonds are issued. The average cost per year for persons living inside the school district, but outside the city, is Ann Arbor Township, $3.04 per $1,000 assessed valuation; Lodi Township, 92 cents per $1,000 assessed valuation ; Pittsfield Township, 92 cents per $1,000 assessed valuation; Scio Township, $2.92 per $1,000 assessed valuation, Superior Townships, $1.96 per $1,000 assessed valuation, and Webster Township, 92 cents per $1,000 assessed valuation. The costs in various parts of the school district, though levied equally, differ because of different local assessing practices. By the spring 'of 1968, however, all property in the city of Ann, Arbor and the school-district townships will be assessed according to 50 per cent of market value. In the past, locally assessed valuation has been based on 25 per cent of market value. For the homeowner w h o s e house has already been assessed at 50 per cent of market value (which includes property owners in Lodi, Pittsfield and Webster townships), the Jan. 8 bonding issue will maean a tax increase of about 90 cents per $1,000 valuation. All of these figures are based upon the assumption that the bonds will be sold at a 5 per cent interest rate- an assumption that has been questioned by the Education Finance Committee of the Chamber of Commerce and defended by the school board and administration. According to an Education Finance Committee report, bond interest rates are at their highest levéis since 1934, and there is little likelihood of the rates decreasing in the spring of 1968, when the first bond issue would probably be sold. In the words of the committee report, "During the chaotic money market conditions which prevail at this time, it is imprudent to borrow any money which is not solutely needed." Business Manager Balas agrees that interest rates are presently quite high, but "there is no guarantee that if we wait, they (the rates) won't go er," he said. The 5 per cent figure, according to Balas, is "conservative." Moreover, the board hopes to sell them at a lower rate, he remarked, in view of the fact that the city's general obligation bonds were recently sold at 4.4 per cent. School Board President Hazen J. Schumacher, Jr. also commented that one of the board's bond experts predicts that the bond market will be "good" in 1968-69, when the bonds would be sold. "The bond market does fluctuate widely," Schumacher declared, "and there are just too many variables in the economy" to absolutely prophesy what the bond market will be like in the future. On the basis of present and projected enrollment figures, the board predicts that the Jan. 8 bond issue would be followed by only one more bonding election this decade- an election in 1972 for approximately $7 million. These additional f u n d s would finance the second stage of the third high school and a sixth junior high. An operating millage election this spring, however, is a certainty. The actual amount of the proposal is not known, but Schumacher has estimated that 9V2 milis would be needed "to maintain this year's budget." These 9V-! milis include a 4V&mill renewal, but do not include any extra expenditures for teachers' salaries or increased expenses.