Latest / The Kevin Stone Podcast / Episode #47 "Ozark Water Tax & Nov 3rd Election"

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Episode #47 "Ozark Water Tax & Nov 3rd Election" · The Kevin Stone Podcast

• 0:05
  Speaker 1: Some podcasts have experts. This is not one of those podcasts.
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  Speaker 1: This is one guy, a microphone, a cup of coffee,
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  Speaker 1: and absolutely no guarantee where any of this is going.
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  Speaker 1: From small town Arkansas to Washington, D.C. From politics and
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  Speaker 1: current events to history, space, faith, and whatever else happens
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  Speaker 1: to get under his skin. He'll ask the questions. He'll
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  Speaker 1: give you his opinion. And every once in a while,
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  Speaker 1: he might even know what he's talking about. No fancy degree,
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  Speaker 1: no corporate talking points, just an ordinary guy trying to
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  Speaker 1: make sense of an increasingly strange world. Ladies and gentlemen,
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  Speaker 1: this is the Kevin Stone Podcast. Hello, everybody.
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  Speaker 2: Kevin Stone with you. Thanks for tuning in. We are
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  Speaker 2: broadcasting from Studio A of the Kevin Stone Podcast headquarters
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  Speaker 2: located right here in Ozark, Arkansas. Now, folks, let's talk
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  Speaker 2: about this water tax. We've got an important election coming
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  Speaker 2: up here in Ozark on November the 3rd. One of
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  Speaker 2: the big issues is this one cent sales tax and
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  Speaker 2: what we're going to do about our water systems. Now,
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  Speaker 2: I've been looking at the city's presentation, going through these numbers.
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  Speaker 2: Got some fancy slides here for you. And I'm trying
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  Speaker 2: to understand exactly what we're being asked to vote on.
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  Speaker 2: And I'll tell you something. Some of this stuff is
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  Speaker 2: about as clear as mud. So I thought we'd sit down,
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  Speaker 2: go through these slides together, and try to make sense
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  Speaker 2: of it. I'm not here trying to tell you how
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  Speaker 2: to vote. I do support putting this existing tax toward
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  Speaker 2: our water problems. But I also believe we need to
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  Speaker 2: understand where this money is going. So let's see what
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  Speaker 2: we've got. We've been here before. Now, this isn't the
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  Speaker 2: first time Ozark has used a one-cent sales tax to
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  Speaker 2: pay for city improvements. According to the city's presentation, this
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  Speaker 2: goes back to 1993. Back then, the money was used
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  Speaker 2: for things like water and sewer improvements, along with police
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  Speaker 2: and fire equipment. And in 2003, some of that debt
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  Speaker 2: was refinanced. Fast forward to 2015, voters approved the one-cent
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  Speaker 2: tax we're dealing with today. That money helped pay for
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  Speaker 2: recreational facilities and emergency services. The presentation shows about $ 10
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  Speaker 2: million in projects. So the important thing to understand is
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  Speaker 2: that we've been paying this tax for years. What's being
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  Speaker 2: proposed now is changing how that money gets used. So
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  Speaker 2: what in the world is a bond? You're going to
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  Speaker 2: hear that word bond quite a bit. All that means
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  Speaker 2: in this situation is borrowing money. Think about buying a house.
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  Speaker 2: Most people don't have enough money just sitting around to
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  Speaker 2: pay cash for one. So they borrow the money and
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  Speaker 2: pay it back over time with interest. A city can
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  Speaker 2: do something similar. It borrows money from investors and promises
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  Speaker 2: to pay it back over a certain number of years.
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  Speaker 2: Now there's another word you're going to hear a lot, refinancing.
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  Speaker 2: That's basically replacing an old loan with a new one.
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  Speaker 2: hopefully under better terms. And when the ballot says the
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  Speaker 2: city can borrow up to $ 18 million, that doesn't mean
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  Speaker 2: the money has already been borrowed or spent. It means
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  Speaker 2: voters are being asked to give the city permission to
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  Speaker 2: borrow up to that amount. What are we voting on?
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  Speaker 2: Now this is where people need to pay attention. We're
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  Speaker 2: dealing with two separate bond questions. One involves up to $ 2, 825, 000
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  Speaker 2: to refinance existing debt. The other involves up to $ 18
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  Speaker 2: million for water and sewer improvement. Those are two different purposes,
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  Speaker 2: and according to the ballot information we've been reviewing, both
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  Speaker 2: questions need to pass for the proposed financing arrangements to
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  Speaker 2: move forward as planned. So don't just walk into the
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  Speaker 2: voting booth, see a couple of questions about bonds, and
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  Speaker 2: start checking boxes. Read what each one says. So where
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  Speaker 2: does a penny go? When we say a one-cent sales tax,
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  Speaker 2: we're talking about one penny for every dollar you spend
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  Speaker 2: on something subject to that tax. Spend $ 100, and this
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  Speaker 2: particular tax adds $ 1. Now here's how the proposed replacement
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  Speaker 2: tax would be divided. Out of every dollar the city
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  Speaker 2: collects from it, about 87.5 cents would go toward paying
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  Speaker 2: the bonds. The remaining 12.5 cents would continue for other
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  Speaker 2: city purposes allowed under the tax. That's what they're talking
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  Speaker 2: about when you see 7 eighths and 1 eighths. It
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  Speaker 2: sounds complicated, but it's really just dividing the money into
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  Speaker 2: two parts. And remember, we're talking about changing an existing tax,
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  Speaker 2: not simply adding another penny on top of it. How
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  Speaker 2: much money does the tax bring in? Well, according to
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  Speaker 2: the city's numbers, in 2019, this tax brought in a
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  Speaker 2: little over 1 million dollars. By 2025, it was bringing
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  Speaker 2: in about $ 1, 380, 000. And the most recent 12-month period shown
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  Speaker 2: in the presentation was right around the same amount. So
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  Speaker 2: we're talking about roughly $ 1. 38 million a year. That's a
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  Speaker 2: pretty good chunk of change. But remember, that's what the
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  Speaker 2: tax has been bringing in. Nobody can guarantee exactly how
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  Speaker 2: much it'll collect every year going forward. That depends on
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  Speaker 2: how much people spend and how the local economy is doing.
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  Speaker 2: What needs fixing? All right, let's talk about what the
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  Speaker 2: city actually wants to do with this water money. The
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  Speaker 2: engineers have identified four major projects. One involves equipment at
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  Speaker 2: the water treatment plant. Two involve major water lines, including
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  Speaker 2: one on the east side of town and another around
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  Speaker 2: Highway 23. And the fourth involves making changes to how
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  Speaker 2: water pressure is managed throughout the system. Now, I'm not
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  Speaker 2: a water engineer, but I understand that pipes, pumps, and
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  Speaker 2: equipment have to work together to get water from the
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  Speaker 2: plant to our homes. According to the city's estimate, the
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  Speaker 2: construction itself would cost about 16.9 million dollars. But when
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  Speaker 2: you add engineering, planning, legal work, and money set aside
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  Speaker 2: for unexpected costs, the estimated total comes to about $ 22. 29 million.
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  Speaker 2: That's an estimate, not a final bill. Now, we've talked
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  Speaker 2: about the $ 18 million in bonds, and we've talked about
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  Speaker 2: the $ 22. 29 million needed for the water project. So naturally,
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  Speaker 2: somebody might ask, well, Kevin, where's the rest of that
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  Speaker 2: money coming from? And that's where your monthly water bill
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  Speaker 2: comes into the picture. According to the figures we've been discussing,
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  Speaker 2: if the sales tax proposal passes, water bills are expected
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  Speaker 2: to increase about $ 15 a month. If the proposal fails,
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  Speaker 2: that increase could be around $ 70 a month. That's a
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  Speaker 2: $ 55 a month difference. And that's important, folks, because we're
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  Speaker 2: not talking about whether we're going to spend money on
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  Speaker 2: our water system. We're talking about how we're going to
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  Speaker 2: pay for it. The sales tax proposal is intended to
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  Speaker 2: help pay for the improvements and reduce how much of
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  Speaker 2: that cost has to come directly from our monthly water bills.
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  Speaker 2: And that's something every voter in Ozark deserves to understand
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  Speaker 2: before walking into that voting booth. We already owe money, too.
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  Speaker 2: Something else we need to remember is that the city
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  Speaker 2: already has some water and sewer debt. According to this schedule,
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  Speaker 2: from the end of 2026 through 2034, there are almost
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  Speaker 2: $ 4 million in remaining scheduled payments on bond issues in 2002.
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  Speaker 2: That includes both the borrowed money and the interest. Now,
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  Speaker 2: that doesn't mean $ 4 million is everything the city owes.
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  Speaker 2: It means that's what this particular set of bonds show.
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  Speaker 2: And just like with your household budget, you need to
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  Speaker 2: know what bills you're already paying before you decide how
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  Speaker 2: much more you can afford to borrow. What about our
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  Speaker 2: water bills? Now we're getting to something everybody understands, the
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  Speaker 2: water bill. According to the city's presentation, a combined water
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  Speaker 2: and sewer bill for 4,000 gallons a month was about $ 10. 85
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  Speaker 2: back in 1992. The figure shown for 2026 is $ 25. 90.
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  Speaker 2: The presentation also compares Ozark with other towns, but we've
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  Speaker 2: got to be careful with those comparisons. Are we comparing
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  Speaker 2: water only, water and sewer together, or are there other
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  Speaker 2: charges included? Because comparing two bills that don't cover the
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  Speaker 2: same things isn't much of a comparison. I want to
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  Speaker 2: know what people are actually paying and what they might
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  Speaker 2: be paying in the future. Can the city raise water rates?
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  Speaker 2: Here's something else worth knowing. Back in 2017, Ozark adopted
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  Speaker 2: a policy allowing certain yearly water rate adjustments based on inflation.
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  Speaker 2: The presentation says those scheduled adjustments were limited to 3%.
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  Speaker 2: In other words, as costs go up, the city has
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  Speaker 2: a way to adjust what it charges customers. But don't
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  Speaker 2: misunderstand that 3% number. It doesn't necessarily mean the city
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  Speaker 2: could never approve a larger increase for some other reason.
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  Speaker 2: We need to look at the actual city rules to
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  Speaker 2: know exactly what can happen. And that's important when you're
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  Speaker 2: talking about future water bills. Now here's a number that'll
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  Speaker 2: get your attention. 68%. Yep, that'll make you sit up
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  Speaker 2: in your chair. But before anybody runs off telling Facebook
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  Speaker 2: that everybody's water bill is going up 68%, let's explain
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  Speaker 2: what that number actually means. The city looked at a
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  Speaker 2: possible situation where the water and sewer system would have
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  Speaker 2: to help pay for the entire $ 22. 29 million project. Under
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  Speaker 2: the assumptions they used, the water department would need a
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  Speaker 2: pretty substantial increase in the money coming to cover the debt.
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  Speaker 2: That's where the 68% figure comes in. But that's not
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  Speaker 2: the same as saying your individual water bill is officially
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  Speaker 2: going up 68%. It's a financial estimate based on a
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  Speaker 2: particular way of paying for the project. They also looked
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  Speaker 2: at another situation involving about $ 7. 5 million in utility borrowing. Again,
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  Speaker 2: these are possible financing plans. They're not the final water bills.
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  Speaker 2: What does 125% mean? Alright, this one's easier than it sounds.
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  Speaker 2: When the city borrows money, the people lending it want
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  Speaker 2: to know there's enough money coming in to make the payments.
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  Speaker 2: And they don't want the city scraping together its last
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  Speaker 2: dollar every time a payment comes due. So they want
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  Speaker 2: a little breathing room. Think of it this way. If
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  Speaker 2: your loan payment is $ 100. They'd like you to have
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  Speaker 2: $ 125 available to cover it. That extra $ 25 is the cushion.
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  Speaker 2: That's what they're talking about with the 125% coverage. The
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  Speaker 2: city's numbers show around $ 1. 38 million coming in from the
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  Speaker 2: tax each year, compared with roughly $ 1. 1 million in yearly bonds.
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  Speaker 2: That's the basic idea behind the cushion. How long are
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  Speaker 2: we paying for this? Now, this is something I really
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  Speaker 2: want people to understand. The city's financial presentation shows estimated
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  Speaker 2: tax collections and bond payments stretching from 2028 all the
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  Speaker 2: way through 2057. Over that period, the estimates show about $ 41. 4
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  Speaker 2: million collected and about $ 33. 1 million in payments on the bonds.
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  Speaker 2: That's a lot of money over a lot of years.
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  Speaker 2: There's also a note suggesting part of the tax might
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  Speaker 2: end sooner, possibly around 20 years if certain things happen,
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  Speaker 2: but it's not a guarantee. I want to see exactly
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  Speaker 2: what the law says about when that portion of tax ends.
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  Speaker 2: Because there's a big difference between saying something could end
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  Speaker 2: in 20 years and promising voters that it will end
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  Speaker 2: in 20 years. So what happens after the election? Alright,
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  Speaker 2: let's put this into everyday terms. If the required questions passed,
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  Speaker 2: the city would have permission to move forward with the
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  Speaker 2: proposed tax arrangement and borrowing plan following the legal requirements.
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  Speaker 2: If they don't pass, the proposed plan doesn't move forward
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  Speaker 2: as presented. But here's something people need to understand. Voting
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  Speaker 2: no doesn't make the water problems disappear. Those pipes aren't
• 10:48
  Speaker 2: going to suddenly get younger. The equipment isn't going to
• 10:51
  Speaker 2: fix itself. The city would still have to figure out
• 10:54
  Speaker 2: how to pay for whatever work is necessary. Now, there
• 10:57
  Speaker 2: have been estimates discussed about water bills might look a
• 11:00
  Speaker 2: little different under the outcomes. but those are just estimates,
• 11:03
  Speaker 2: not guaranteed increases. I support using the existing tax to
• 11:07
  Speaker 2: help address our water system, but I also want the
• 11:10
  Speaker 2: city to explain what happens financially either way, because voters
• 11:14
  Speaker 2: deserve to know. We've still got some questions. After looking
• 11:17
  Speaker 2: through all this information, there are still things I'd like
• 11:19
  Speaker 2: to see answered. Exactly when does the bond-paying portion of
• 11:23
  Speaker 2: the replacement tax end? What happens to the other portion
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  Speaker 2: that continues? Where does the money come from to cover
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  Speaker 2: the difference between $ 18 million and the estimated total project cost?
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  Speaker 2: What are the final borrowing costs going to be? Which
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  Speaker 2: water projects get done first? And most importantly, for a
• 11:39
  Speaker 2: lot of folks, what might all this mean for their
• 11:41
  Speaker 2: monthly water bills? These aren't unreasonable questions. We're talking about
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  Speaker 2: public money, our money. And I believe the public has
• 11:48
  Speaker 2: every right to ask how it's being spent. That's why
• 11:50
  Speaker 2: I've been requesting additional records from the city. Here's where
• 11:53
  Speaker 2: I stand. Folks, I live here in Ozark. I pay
• 11:56
  Speaker 2: taxes here, just like a lot of you. And I
• 11:58
  Speaker 2: want our city to have a water system that works.
• 12:00
  Speaker 2: I don't think anybody wants to see the city spending
• 12:03
  Speaker 2: millions of dollars unnecessarily. But I also don't believe we
• 12:06
  Speaker 2: can keep putting off problems just because fixing them costs money.
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  Speaker 2: At some point, somebody has to deal with them. I
• 12:12
  Speaker 2: support putting our existing one-cent sales tax toward fixing the
• 12:17
  Speaker 2: water system. But supporting something doesn't mean we stop asking questions.
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  Speaker 2: We still need to know what the project costs, how
• 12:23
  Speaker 2: the money gets spent, and what happens down the road.
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  Speaker 2: And whether you agree with me or not, I encourage
• 12:28
  Speaker 2: you to look at information yourself. Ask questions. Talk to
• 12:32
  Speaker 2: the candidates and city officials. And most importantly, get out
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  Speaker 2: and vote on November 3rd. Because this is our town,
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  Speaker 2: and these decisions affect us all. I'm Kevin Stone. This
• 12:41
  Speaker 2: is the Kevin Stone Podcast. You can find us on YouTube,
• 12:44
  Speaker 2: Amazon Music, iHeartRadio, Spotify, Apple Podcasts, and Spreaker. Thanks for listening.
• 12:49
  Speaker 2: I'll talk to you next time. Thank you.