Dearest reader,
I keep running across the same two words in school bond proposals:
"Tax neutral."
Hemlock Public School District called its 2022 proposal a "tax neutral initiative." Four years later, Hemlock is again describing its November 2026 proposal as "tax-neutral."
Freeland Community School District is using the phrase for its November proposal as well.
And that sent me down a little rabbit hole.
What exactly does "tax neutral" mean?
Generally, districts are telling voters that if the proposal passes, the tax rate is expected to remain at or near what taxpayers are already paying.
That's useful information.
But it isn't the only information that matters.
Existing bonds are paid down. Debt expires. Taxable values change. Millage requirements can decline. And new bonds can potentially keep a tax rate in place longer than it otherwise would have remained.
So there are really two comparisons:
What will I pay if the proposal passes?
and
What would I pay if it doesn't?
Those aren't necessarily the same question.
Michigan law allows school districts to use public resources to provide voters with objective factual information about ballot proposals. It does not require every piece of communication to make every possible argument about the proposal.
So describing a proposal as "tax neutral" may be factually accurate when comparing the proposed rate with today's rate.
But that still leaves me with a question:
Tax neutral compared to what?
If I'm paying 3.9 mills today and I'll pay 3.9 mills after approving new debt, there may be no tax-rate increase.
But what would I have paid next year, five years from now, or ten years from now without the new debt?
And does approving the new bond extend how long taxpayers will continue paying that millage?
I'm beginning to think those two words deserve a little more attention.
"Tax neutral" tells us something.
I'm interested in what it doesn't tell us.
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