County says Hays Parks Bond will not affect tax rate

The $75 million Hays County Parks Bond may look like a potential blow to residents’ property tax bills, but county financial advisor Dan Wegmiller says the bond is not likely to increase taxes.

Hays County Proposition A would potentially fund, either wholly or partially, approximately 15 projects that were vetted by the Parks and Open Spaces Commission (POSAC) earlier this year. 

While POSAC found in a poll that 71-78% of residents support the bond when there is no affect on the tax rate, in tough financial times, the commissioners and judge passed along the decision to the hands of the residents who are experiencing the economic crisis brought on by COVID-19.

How the tax rate could remain unaffected by a large bond has to do with retiring and refinancing current debt and projected growth of the county. 

Wegmiller explained in a July 28 commissioners court meeting that interest rates are at all time lows and the county had an opportunity to refinance three issues with current rates of 3.1%-5% down to a new estimated rate of 2.1%.

Likening the option to refinancing a house, Wegmiller projected a reduction of over $4.08 million in costs over the life of the issue and a savings of $238,000 per year.

In calculating the impact of the bond to the county’s debt, the county also considered a conservative growth projection. 

“Basically the culmination of the new growth will help support the new debt because the new growth contributes new revenue,” Wegmiller said.

The voter-approved bond will allow the county to issue the funding, but they have several years until the contract must be fulfilled.

“You don’t necessarily plan to issue all the debt at the same time,” Wegmiller said. “New debt will be phased in with issuances. If you plan it over time, you get the benefit of the growth.”

Hays County will likely issue the funding over time to ensure debt payments are flat and tax rates are not affected.

“If for some reason growth doesn’t happen, you press the pause button,” Wegmiller said. “Bonds get voted and authorized and you always have the ability to pause.”

For more information about Proposition A and its potential projects, visit hays2020parksbond.com.