DENVER, Colorado — Many of us are getting ready to pay property taxes at the end of the month. However, some school districts in Colorado who rely on that revenue may not be able to wait that long for the money to come in. So, they've turned to the treasurer's officer for help.
The treasurer operates an interest free short-term loan program called Education Tax and Revenue Anticipation Notes (ETRANS.) For fiscal year 2019, some 22 districts in borrowed a combined $800 million through the program.
Treasurer Dave Young explained the districts who borrow from the program most often also who tend to rely more heavily on property taxes.
"If they rely heavily on property tax, which comes in in another month or so, then when they get to these lean months that we're in right now, they run into a cash-flow problem," he said.
He compared the loans to a payroll loan or bridge loan that business owner apply for regularly. The biggest difference is that the interest is on these loans are subsidized by the legislature.
"All of those loans are going to be paid back before the end of the fiscal year at the end of June," Young said.
The schools don't need to ask voters before borrowing in this program money.
"This is a short-term bridge loan," Young explained. "It is not going longer than one budget year"
The requirement to seek voter approval in of the Taxpayers Bill of Rights (TABOR) Amendment specifically refers to long-term bonded debt. For example, Pueblo City Schools needed voter approval to borrow the roughly $300 million it needed to build new high schools.
While the repayment window is short, the money isn't completely interest free. The state still pays interest for premium adjustments on the bonds it issues from the general fund.
"The taxpayers of the State of Colorado, across the entire state are helping us pay that," Young said.
In fiscal year 2018, the state issued around $635 million in these short term loans. The total paid in premium adjustments and interest amounted to roughly $28 million. The 2019 series bonds are due by the end of June. So, we'll know later this summer how much was paid in interest.
Young pointed out that the State of Colorado also invests taxpayer money at a much larger scale. He estimates around $10 billion is invested at any given time.
"We know that if we leave it in the bank, it doesn't really earn as much interest as it could."