When USD 259, the Wichita public school district, recently sold some bonds, they took advantage of a new program called Build America Bonds. This program was passed as part of the federal stimulus program earlier this year.
The benefit to the Wichita school district is that the federal government will pay 35% of the interest on the bonds. Reading the news release from the school district, it’s just like free money. Pennies from heaven, as it were.
The problem is that the Build America Bonds are a tremendous burden to federal taxpayers, and will likely be so for some time. As a recent Wall Street Journal article reported: “With every new Build America sale, which applies to only taxable debt, interest payments as long as 30 years in the future are added to the government’s obligations. By even conservative estimates, the program is racking up ‘staggering’ costs, according to Municipal Market Advisors.”
Cost-shifting to other taxpayers is a favorite tactic of the Wichita school district. Campaign buttons worn during the bond issue boldly proclaimed 25%, that being the percentage of the Wichita bond issue costs that taxpayers living in other Kansas school districts would pay. Not wanting to miss out on a good thing, many other Kansas school districts have passed bond issues that we in Wichita have to pay for.
Now, through the Obama administration’s Build America Bonds program, the Wichita school district is able to spread its costs across the entire county.