Massive State Bond For Schools City Sewers
The Republican proposal also would help municipalities finance the renewal of projects to replace aging sewers.
The general obligation bond would be for $2 billion. The term 'general obligation,' means that the bonds would be paid off from the state treasury's general fund revenues.
The proposal requires approval of two-thirds of both legislative houses to go onto the ballot for the Nov. 5 general election
Of the proposed $2 billion in bonds, the senators propose allocating $960 million for school improvements through a pool of state funds.
Local school districts with local bonds issued after June 1, could borrow all or a portion of the total bond from the state at a zero interest rate, depending upon a formula that weighs the school district's taxable value per pupil.
One of the proposal's sponsors, Sen. Loren Bennett, R-Canton, said the money-saving proposal would enable schools to pay for certain safety measures which heretofore have been beyond their reach.
Sen. Bennett presented the proposal at a press conference last week. With her were Sen. Ken Sikkema, R-Grandville, Sen. Leon Stille, R-Spring Lake, and Sen. Dan DeGrow, R-Port Huron, the majority leader.
They explained that public school academies would be allocated $40 million for infrastructure needs. The academies would eligible to borrow an amount equal to $581 for each student in their enrollment.
The senators said the notion was to help academies which, by law, cannot use direct general obligation bonding to finance infrastructure improvement. The public school academies, being tax-payers, would help pay off the general obligation bond, while also making payments on their own direct obligations to the fund.
Stille said the primary impulse behind the measure was "finding a way to help our most needy school districts build buildings.
"These are the people who generally pay more in interest than on the loan itself. This plan should be a great assist to those districts and bring help to the very people who have paid the price of old schools the longest."
The proposal would make two types of financial assistance available to municipalities.
First, it would pour $20 million a year for the next 10 years into the State Revolving Fund to underwrite a new state-financed interest rate subsidy, so that local governments could borrow for sewer projects at a rate of 2.5 percent - that's a savings of 2.5 percent on current tax-exempt borrowing rates
Secondly, it would sharply increase the amount of money in the fund's loan pool so that local governments could borrow directly from it more cheaply than anywhere else.
Sikkema said the program provides communities added resources to deal with one of the most five critical issues facing the Great Lakes.
"This bond proposal addresses the concerns of Michigan residents by providing communities with additional resources to help protect the Great Lakes."