Montgomery County Council President Roger Berliner outlined a plan Monday to deal with overcrowding in public schools by taking out bonds against the recordation tax to pay for school construction projects over the next five years.
The plan calls for the county to issue $300 million in bonds backed by roughly half of the expected annual revenue generated by the real estate recordation tax increase approved by the council last year to pay for school building improvements.
The proposal would give the county access to short-term cash that it would then have to pay back over 20 to 30 years, using about $30 million each year from the recordation tax to pay the debt service on the bonds.
“Overcrowding in our schools is one of the most pressing and urgent needs we have in our county,” Berliner said during his weekly Monday morning press briefing. “The school system is growing between 2,500 to 3,000 kids per year and we are underwater almost everywhere in our county.”
The county estimates the recordation tax will generate about $61.6 million in fiscal 2018 and that figure will rise to about $74.2 million in fiscal 2022. When the council approved the increase in the recordation tax, which is applied to home sales, the county estimated the increase would bring in about $200 million in additional revenue through 2022. At the time, the council said about $125 million of that additional revenue would be directed toward school construction while the other $75 million would be used to build affordable housing and to pay for other infrastructure projects.
Berliner said the bonds—minus the debt service—would provide the county with $150 million in additional funds over the next five years to build and expand schools. He said the bonds wouldn’t count against the county’s overall bond rating because they are backed by the tax revenue and are not general obligation bonds.
He said school leaders including Superintendent Jack Smith and Board of Education President Mike Durso support the proposal.
Bonding is also a way for the county to pay to construct projects that county residents will use over the life of the school buildings, Berliner said.
“These projects are 20-, 30-, 40-year projects,” Berliner said. “They should be paid for over 20, 30 years rather than out of cash. So it is a fair way to do this work and it helps us expedite this work and expedition is so very necessary.”
In a presentation last year about MCPS enrollment, school officials noted that as of 2015, enrollment in 11 of the county’s 19 elementary school clusters was over capacity, while seven middle schools and 10 high schools were over capacity.
Paul Geller, president of the Montgomery County Council of PTAs, described the proposal as “awesome” on Monday and thanked Berliner for proactively putting it forth.
“This is truly going to benefit kids in the county for a long time to come,” Geller said.
Berliner has asked the school board to send the council a list of the projects the board would like to pursue with the additional funds over the next five years. Once that list is transmitted, Berliner said the council would take up the funding proposal—possibly as soon as this fall.
