School district officials warned lawmakers on Wednesday that Gov. Brian Sandoval's plan to sweep half of their bond payment reserves to make up general fund operating budget cuts could wind up costing money and even raising taxes.
The governor's budget takes $425 million from the bond reserve accounts of the 12 school districts with outstanding bonds. It changes the law that requires schools to maintain a 12 month reserve for bond payments to six months.
The plan moves that money from the bond reserves to school operating accounts to cover part of state budget reductions.
Jeff Weiller, chief financial officer for the Clark County School District, said with declining property tax revenues, that money will be needed over the next five years to sustain the bond payments Clark must make.
"Taking any money out of debt service will force us to restructure the bonds," he said. "That means extending the mortgage out longer."
He said refinancing their outstanding bonds could turn 20 year bonds into 30 year bonds or force an increase in the county property tax to maintain payments.
"Over the next five to seven years, we need all that to cover our debt service," he said.
Carson City also has outstanding bonds to pay off. It wasn't certain how the governor's proposal would impact the capital district. The administration hasn't spelled out the details yet of how much each district would lose and when the state would claim the money.
Director of Administration Andrew Clinger said more than $300 million of the total likely will come from Clark County but that his staff isn't finished calculating the cost to each district.
Joyce Haldeman representing Clark school district said another concern is whether the money is given back to the county or distributed throughout the state.
"We may give $400 million and get $312 million back," she said.
She and Roberts also questioned the legality of the plan, saying voters approved the bond programs for construction - not for operating costs such as salaries.
The joint Ways and Means/Senate Finance committee is getting an overview of the governor's recommended budget so they are briefed and ready for in-depth reviews of agency spending plans when the 2011 Legislature opens Feb. 7.
