Guest Opinion By: Joe Boogaart, thoughts on Pima County's Bond initiatives
Vote No! Government is seldom the creator of prosperity, but rather an inefficient re-distributor of wealth. It collects taxes from average Americans and those dollars rarely return to main street small business USA without extracting the lions share. Pima County’s 2015 bond initiative has three cause and effect cash flow components: Principal, Interest and new operating and maintenance costs (O&M).
From a business perspective will the $816 million be used to promote prosperity? If not, then the existing tax base will pay more, reducing business and personal free cash flow necessary for expansion and the purchase of goods and service, in turn leading to economic contraction. It is also important to consider what share of the $816 million will be invested in fallow assets or be spent with suppliers and contractors residing outside Pima County.
Interest expense of $264 million goes in one direction only. Unlike Japan whose debt is financed internally, Pima County bonds are sold nationally and internationally and therefore repayment of the $816 million in principal along with the $264 million, about $1.1 billion total, will be shipped to the lender.
Principal and Interest once set are relative straight forward. The fox in the chicken coop is the operating and maintenance costs.
Unincorporated Pima County & municipality taxpayers will be responsible for an estimated $545 million in O&M costs over the life of the bond program. This figure will be greater if any of the “not for profit corporations” receiving 30% of the funding, default on their obligations.
If Pima County is looking for sustainable jobs, they will not be created by stimulating the building trade through taxing, borrowing and building. When the stimulus stops, so do the jobs. I think this was well documented during the great recession.
From a cause and effect perspective, Pima County and City of Tucson have entered a spiral. The City Council’s and Board of Supervisor’s lack of fortitude to face tough budget cuts, leads to higher property taxes. This in turn results in a reduction in business activity and climate. Businesses move or close putting more strain on the budget requiring higher taxes. The business community is most vulnerable since they are not protected by the 1% primary property tax cap.
Administrator Huckleberry a few years ago figured a way to bypass the intent of the cap and shift the excess to state (other counties). The current Governor caught the line item, which according to Mr. Huckleberry’s Memo of March 18, 2015 to the Board of Supervisors, will require the county to assume an $18.6 million overrun for 2016. If residential primary property tax cannot exceed the 1%, the only property left to tax is commercial, thus escalating the spiral. Government has the responsibility to assure that the public has good infrastructure, and a safe environment. Everything else is subject to prosperity. Voting for the $816 million bond package will definitely satisfy a number of special interest groups, but at the expense of taxpayers of the 5th poorest metro area in the U.S. Pima County needs new money that private investment brings, not government money which amounts to a transfer of wealth.
For these reasons, I ask the business community to Vote No on all seven bond initiatives.
Joe Boogart is a member of the Pima County Bond Advisory Committee, the opinions, suppositions, and conclusion expressed herein are his alone and are not meant to reflect those of the bond advisory committee, Pima County, or any other governmental entity.