Bonds

Taxpayers Lose Big

Bonds are one of the biggest sources of government waste. At a 5% rate of return on Bondholders’ money, the cost of the Bonds to the city, county or state are roughly equal to the face amount of the Bonds sold. Banks love Bonds. Investors love the tax-free returns they get on Bonds. Banks, Bond Brokers, Bond Market Makers and Lawyers love the fees they make from Bond issues. Politicians love the campaign contributions they receive from Banks, Bond Brokers, Bond Market Makers and Lawyers. Any questions?

The big looser is the taxpayer who unnecessarily pays twice the amount it ought to cost for whatever the Bonds are supposed to fund. Cities, counties and states are allowed to sell a lot of Bonds according to most State Laws. There have been no tight caps imposed on Bonds, because the Bond Lobby is always there and taxpayers do not lobby against things that actually cost them the most money.

In Dunwoody Georgia, in 2011, two $33 million Bond Issues were voted down, largely because of the double cost of Bonds. Other reasons for the 66% NO VOTE included the fact that these Bonds were for City Parks, not an urgent need. The $128 million price tag for $66 million in Bonds for a city with a $20 million annual revenue also contributed to the NO VOTE. The fact that 501c3 non-profit organizations , with their own fund raising capabilities were squatters on city park land and stood to benefit from the Bond squander was an issue for some.

Oddly enough, a 1 cent E-SPLOST passed in DeKalb county despite the fact that the public school system issues Bonds to pay for new schools and facility upgrades routinely and nobody uttered a whimper. Public schools are another failed business model and it’s hard to understand why voters haven’t demanded that they be privatized.

It’s easy to understand why the federal government likes our failed private schools. If public schools were privatized, the Liberal propaganda machine would lose its Marxist political indoctrination camps.

This could change if voters refused to vote for the next 1 cent SPLOST for public schools, “because it’s for the Kids”. Voters could demand that public schools get off the Bond drug and operate their billion dollar bureaucracies on a pay-as-you-go basis.

There is something else I’m suspicious of; it’s the rising cost of all things paid for with Bonds. If all governments had to operate without Bonds, I bet prices would subside and drift lower toward reality.

You can find out how much your city, county or state or school system or any other independent government entity like MARTA is squandering on Bonds by looking up their budget and financial reports. The cost of the interest and fees paid can be found in “debt service payments”. Some of these websites hide this Bond income and some bury their debt service or don’t include it in their published budgets, so it may take some digging.

A good example of not mentioning all revenue sources and spending can be found in the State of Georgia Budget for 2011. It does not include the $15 billion received from the federal government or the extra $22 billion the state spent in 2011. At the end of 2010, the State of Georgia did sell a boatload of Bonds, so some of this $22 billion might be from Bond sales; the rest is a mystery to me.

I can understand when you have to make payments, take out a loan and pay it off with interest. Most of us bought houses and cars over time. But governments can organize efficiently and budget their tax revenues and manage tightly. They can attend to funding the basics like sewers, water and roads by earmarking what they need to meet their maintenance schedules. They can budget to run a surplus. They can avoid low use, low priority expenses. They can automate to save labor costs. They rarely do these things. Governments would rather borrow funds for capital improvements and maintenance, but there are exceptions.

Rural, agricultural counties tend to be managed more tightly when a smart, honest old farmer or rancher has enough help on the farm and wants to take his turn serving on the county council. People tend to know each other well in these rural counties and good people do step up to take their turn to serve. These smart old farmers can manage tight. They don’t like debt and they are better stewards of county funds than most. As long as these folks stay in office, the county runs well.

One election of free-spenders can send everything South.

Norb Leahy, Dunwoody GA Tea Party Leader