The Big Sky Way: The name is Bond… Bond Levy

By Danny Bierschwale EBS COLUMNIST

I’m not Sean Connery, Daniel Craig, or for that matter even Austin Powers. However, to set the stage for our ongoing civic discussion, let’s imagine we are sitting at a classic 007 high stakes casino game. The money we bring to the table is extremely important and of course we have a signature Bond gadget to get us out of what is sure to be a sticky situation. What’s most important is for our hero to complete the mission at hand.

Much like this secret agent, many of Big Sky’s government entities also have a mission. To accomplish those objectives, state law provides tools to achieve those goals. In many scenarios, ballot measures and elections are how the public approves or denies implementing those tools.

In our last column, we discussed governance of many Big Sky districts, focusing on the elections/appointment structure of those boards—all of which are outlined through state law. Depending on the complexity of the organization, the roles and responsibilities of serving on any particular board range from operational to strategic or some combination. These roles are often defined in a guiding document called bylaws. For example, the Resort Area District’s outlines operating structure for accomplishing its mission.

In many cases, state law allows some local governments to seek voter approval to acquire funding via property taxes. While this funding isn’t the only revenue stream available, it’s certainly a widely used tool by local governments to accomplish the mission at hand.

Property Taxes: Demystifying bonds and mill levies

In addition to board/trustee elections, the recent May election included ballot measures for funding requests. Both the Big Sky and Ennis school districts asked the electorate for funding using distinctly different tools, and for different purposes.

One of the tools that voters were able to cast a ballot for was a bond. An easy way to think of bonds is that they’re generally for building. Just like when you want to add an addition to your home, you must decide how to pay for it: you could pay cash, or you could pursue taking out a loan. Similarly, the mission and objectives of a local government often require investment of funds but need to borrow money to take action quickly and deploy those funds towards a targeted purpose – this referred to as a bond.

A ‘bond,’ ‘bond levy,’ or ‘capital bond,’ if passed, is ”levied” on the tax payer through property taxes. This debt is spread over a term (typically years) and taxes are used to pay off the bond including interest. Once the debt service has been paid, the taxpayer is no longer obligated. The tax has served its purpose and removed from your property tax bill.

In an alternate scenario, let’s assume the local government has a need for funding that isn’t tied to a large-scale capital investment requiring immediate access to a lump sum of funding. The tool used to achieve this is called a mill levy. A mill is an increment of tax based on the taxable value of a property. For a full explanation of calculating taxable value, please reference the guide to understanding taxes in Big Sky.

Mill levies are used for day-to-day expenses and maintenance. They can help supplement a general fund (think salaries) or be for a specific purpose such as technology. There may be multiple mill levies on the same ballot so it’s important to denote the duration (term) of the mill and the specific financial impact per year based on taxable value of the property. 

Side note, the term ‘levy’ is used both as a verb and noun which can be confusing. What’s most important to denote is that bonds are long-term debt for a lump sum and mill levies are for a specific operational purpose—all collected through property taxes.

Regardless of the ballot measure, it’s important to have a clear understanding of the mission.  Just like 007, organizations also need the tools to accomplish their mission. It’s up to you—the voter—to determine if you want to support that mission. 

Daniel Bierschwale is the Executive Director of the Big Sky Resort Area District (BSRAD). As a dedicated public servant, he is committed to increasing civic engagement and voter education. Many ballot issues impact government services and public funding including subsequent property tax impacts. BSRAD is the local government agency that administers Resort Tax, which offsets property taxes while also funding numerous community-wide nonprofit programs.