top of page
  • Writer's picturePaula Smith

City of St George, What are GO Bonds


Paula Smith St George City Council Candidate GO bond explanined

The City of St George will have a Parks & Recreation GO Bond on the November 2023 ballot. The purpose of this article is to educate residents on exactly how GO bonds can impact the City and the costs related to the bond.


What are GO Bonds?


General Obligation, or GO bonds, allow the City to borrow money for projects leveraging property tax. GO Bonds are utilized for multiple purposes, such as the construction of public schools, infrastructure, police and fire stations, and parks and recreation.


Go Bonds are voter-approved, and the funds must be used under the category for which they were approved (meaning you can't use the "Parks" GO bond to build a fire station; however, a city may have multiple GO Bonds approved for different uses and each may have different monetary debt).


Go Bonds are paid through property tax.

The City of St George has an expiring Parks & Recreation GO bond. The expiring bond was approved in 1998 for $18 million. The City is requesting a new GO bond to replace the expiring GO bond. The new request is for $29 million, and the requested amount is based on the CURRENT annual amount allocated in the budget. The current amount is the final payment and the highest payment. The total cost of the GO bond at maturity will be approximately $46 million. www.sgcity.org/gobond/


Once voters approve, GO bonds are a blank check for the City to use as discretionary funds (specific to parks and recreation). Once approved, the voter will no longer be involved in deciding how to spend that money; as long as it's used under a parks and recreation umbrella, the City Council will allocate the funds at their discretion for projects they determine. The City is not obligated to use all the funds;* the funds will be available for the City to use as they desire for the next 8 years (and payments will continue for 25 years or until paid in full*). Historically, the City will spend the entire bond amount, and taxpayers will continue making the payments after the funds are depleted. It's not uncommon for additional costs (debt) for the same projects to develop years later (thereby making multiple payments to the same park -or trail- over the years).

GO BONDS ARE NOT FREE MONEY.


While typically advertised to voters as a way to obtain funds and "not raise tax," this is untrue. Once the current bond expires, our property taxes will slightly REDUCE. Since we are already accustomed to paying this amount, replacing it with a new bond will not appear to "add tax," but we still pay for it within the budget, and the *overall* costs will increase over time. Our city budget includes payment for the existing bond; in 2021/2022, we paid $1.5 million. For 2022/2023, we paid $1.8 million; for the pending budget 2023/2024, our final payment for the expiring bond will be $1.85 million. We ARE paying for this. The debt increases. Payments increase (*based on market conditions*). It's NOT FREE.


We must consider that we will be adding more public safety expenses (including fire stations and necessities), which will add more to the budget and require the need for additional GO Bonds or taxpayer funding. The City is ALREADY on record for planning a property tax INCREASE next year for Public Safety expenses. (https://www.sltrib.com/news/2022/09/02/st-george-cuts-budget-hire-more/?fbclid=IwAR3eGmp-uG3p6RqVVzM5gEk7h4ZhZyiWPq4P-G47_RYuD8o4MPyQnROmh5k) <“You cannot keep taking one-time money to pay for something like this. It just doesn’t work that way,” the mayor said. “So we just really kicked the can down the road for another time. I think we’ll have to have another discussion about a [property] tax increase again in a couple of years because it is impossible to fund public safety at this kind of level when you haven’t raised property taxes in 35 years.>


As responsible citizens, we must examine the benefits and drawbacks of investing a substantial amount of funds and relinquishing spending control, particularly during economic volatility and when current budgetary spending has soared and expectations for decreased revenues are likely, as projected within the proposed City Budget. If revenues decline, taxes will increase. It may be advantageous to delay this bond and avoid imposing additional debt on taxpayers. Allowing the bond to expire without renewing will FREE UP $1.85 million in debt expense and offset public safety spending. Reducing debt is a great option. We LOVE our parks and trails in St George; they contribute to the beauty and quality of life. None of us want the parks and trails to disappear; however, we can pause on added spending for parks and trails as we gain perspective on cost projections for upcoming public safety requirements. *Pausing on this GO bond will not cut off all funding to Parks. Our current budget allocates $18 million for Parks and services (this number will HAVE to INCREASE as we continue to add new parks--to pay for employees, maintenance, and equipment). The RAP tax adds approximately $3 million annually towards Parks and Recreation. $4,500 from Impact Fees FROM EACH NEW HOME are allocated toward new Parks. If we set aside $1.85 million yearly towards parks, we would achieve the bond amount of $29 million in 15 years. We will save $18 million in interest payments (and if we have an economically challenging year, we could pause the payment, whereas the bond will require payment regardless of economic condition).


I am NOT opposed to GO bonds, but allocating such an excessive amount of money without a clear understanding of upcoming expenditures and the projections of reduced revenues may not be the best decision for residents this year. We are burdening current and future homeowners, decreasing housing affordability, and adding pressure to our homeowners living on a fixed income for as long as 25 years. Residents must evaluate stacking additional debt and perhaps pause to assess our "wants" and "needs" and allow the economic impact of upcoming public safety expenses to become fully understood. I am glad that the voters will decide to approve or decline the bond. Still, voters must understand the full scope of the bond and the impact of costs for obtaining bonds (as well as knowing the City Council stated they will raise property taxes next year to fund public safety needs).

 
  • FACT – Park & Rec Go Bond will last up to 25 years, and once approved, they are funds for the City to use "at will" and their discretion for parks (building, repair, or as desired items relating to parks and trails).

  • FACT - ALL OF THE BOND money must be used within 7 years.

  • FACT – GO Bonds are paid by the taxpayer through property tax.

  • FACT – because GO Bonds can be used anytime and payments are made for 25 years, we burden our future residents with taxes and decreased affordability.

  • FACT – GO Bonds are attached to property tax. When the economy experiences a recession, the bonds must still be paid; property taxes will increase to cover all bond payments.

  • FACT – The St George budget will pay $1.85 million for the final annual payment from the prior GO Bond established in 1998

  • FACT – without a new Go Bond, we can free up $1.85 million from our budget debt.

  • FACT – $29 million is the amount the City determined because this is the payment we CURRENTLY pay with our expiring GO bond (current payment is peak payment).

  • FACT – We will NOT pay the same amount in 25 years once this proposed bond is approved and the funds are maxed. Long-term implications must be considered. **

  • FACT - Ten years ago, the allocated paid amount within the City budget for the GO bond was $1.4 million; the current payment is $1.8 million. **

Elect Paula Smith St George City Council

If you're a current St George resident, please answer this poll. Do you support the current GO Bond?

  • Yes, I support the $29million, 25 year bond

  • NO, I do NOT support the $29million current bond renewal

  • I am undecided about the upcoming bond vote.

Paula Smith St George City Council

*indicates updated clarification

**indicates the City has noted regarding the current bond: The total estimated cost of the issuance including interest over the life of the 25-year term is $45.9 million at an estimated 4.07% true interest cost based on current market conditions. <This is assuming market conditions stay the same.>

Here is additional GO Bond information presented to the City last year.

City Of St George GO bond presentation
.pdf
Download PDF • 171KB

Kommentare


Die Kommentarfunktion wurde abgeschaltet.
bottom of page