On January 6, 2013, right on the top of the Sunday Chicago Tribune, there was an expose that should send warning flares up about the alternative revenue bonds that the majority of the McHenry County College Board seem set to issue.
Alternative revenue bonds are ones ostensibly to be repaid by identified sources of revenue, for example in MCC’s case, an increase in student fees of $8 per hour, increased tuition from more enrollment and health club fees among other sources.
But, just in case, don’t you know, to be paid by property taxes if the projected revenues from the other non-real estate sources don’t bring in enough money.
The Tribune doesn’t look at junior colleges in its article. As the headline implies, it looks at “Small suburbs [that have] exploit[ed] tax loophole.”
The sub-headline on the front page reads,
“Even in places where residents might expect tighter oversight, Illinois borrowing rules let towns sidestep voters, make decisions that can backfire on taxpayers”
McHenry County College taxpayers managed
- not to step in the Briar Patch when the Board wanted to borrow, without asking voters at the ballot box, $25 million to finance a minor league baseball stadium,
- but are facing a similar entangling long-term obligation in current Board members’ desired to borrow, without voter approval, $45 million to build a health club and new classrooms (even while only using the classrooms 45% of the time).
The story describes alternative revenue bonds as a
“device that lets towns borrow in a way that sidesteps voters and property tax caps.
- The catch for towns: They must be able to foresee paying off the loans without raising property taxes.
- The catch for residents: If towns’ projections are wrong, taxes are automatically hiked to make the loan payments.
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