October 24, 2014

Gardner debt reaches over $100 million

Jeff Barber, Gardner, is $14,804 in debt – not including his mortgage, cars or credit cards. That’s his share of public debt from local entities including state, local, county and school debt. When the national debt is included, Barber – along with every man, woman and child in Gardner – owes $55,933.

The Gardner News gathered debt figures from the Gardner Edgerton School District, the city of Gardner, Johnson County – including the library system and Johnson County Community College – and the state of Kansas. In order to determine Barber’s share, news staff divided the amount of debt by the number of people responsible for it. For example, the state of Kansas is approximately $3.8 billion in debt and there are approximately 2.8 million people in the state. Barber’s share of Kansas’ debt is $1,357.

The numbers are imprecise, public officials were quick to point out. For example, news staff included interest when figuring for the city of Gardner, the school district and the county. The state of Kansas did not have interest numbers available. However, on bonded debt, the interest almost always must be paid whether the principal is paid early or not.

Leslie Friedel, a management and budget analyst with Johnson County, said public debt is not easily compared to private debt – like a mortgage.

When a homeowner pays their mortgage off early, they only pay interest up to the day they pay the principal off in full. With most bonded debt, full interest must be paid whether the loan is paid off early or not.

“That’s the easiest, most conservative way to say it, but there are times that’s not always correct,” city finance director Laura Gourley, said.  “It’s very, very complicated.”

School finance director Eric Hansen agreed.

“You really can’t just say we’ve got $100 billion sitting around in the bank we’re going to pay these off at once. It doesn’t work out that way,” he said.

The city of Gardner currently owes $111.6 million including principal and interest, and not all of the debt is bond debt. Car lease payments were included in Gardner’s figures, for example.
Public debt also won’t be paid equally by all citizens. Gourley used the swimming pool – which comprises approximately $11 million of the city’s debt – as an example. The aquatic center’s debt is primarily paid through a half-cent sales tax.

“That’s paid by anybody who purchases anything in Gardner whether they’re a citizen or not,” Gourley said.
Another $18.4 million of Gardner’s debt will be paid through benefit districts – only individuals with property within those districts will be responsible for paying off that debt.

“All these things only complicate your “per capita” calculation, but it just illustrates that the city’s debt is different than the school district’s debt, and also different from the debt of other cities,” Gorely said. “Most cities don’t have their own utilities, and therefore don’t have significant utility-backed debt.”

A significant amount of the debt from all entities will be paid through property taxes, Gardner Edgerton School District Superintendent Bill Gilhaus explained, but commercial properties are taxed at higher rates than residential properties.

“But remember you’re going to have corporations paying a significant portion of that,” Gilhaus said. “The portion of taxes that they pay is obviously higher.”

Also, Gilhaus said the school district receives re-imbursement from the state for some bond payments.

The school district currently owes $149 million including principal and interest. Hansen said that includes continuing payments on 10 separate bond issues – including bond issues in 1998, 2000 and 2005. Another school bond issue is likely in 2011 or 2012.
Taxpayer Barber said if it was possible, he’d like to just write a check and pay off his portion – especially if it meant no more taxes in the future.

“I’m cool with paying that amount if there isn’t any more griping and if there isn’t anymore sales tax and that sort of stuff,” Barber said. “I can see myself paying that portion. I wouldn’t have a problem paying for it.”

However, annual debt payments are only a portion of public entities’ budgets. They also must pay ongoing expenses for daily operations like paying the salaries of police and teachers.

Comments do not necessarily reflect those of The Gardner News, or staff. By posting, commentators assume all liability. Please contact webmaster to report comments that infringe on copyrights, or are of a profane or libelous nature. Webmaster reserves the right to edit or remove content deemed offensive.


 

Speak Your Mind