Tuesday, April 2, 2013

Municipal Bankruptcy: Coming to a Government Near You?

Great news: A U.S. bankruptcy judge has ruled that the city of Stockton, CA can declare bankruptcy.  News reports have called Stockton "emblematic of government excess."
Its salaries, benefits and borrowing were based on anticipated long-term developer fees and increasing property tax revenue. (Emphasis mine.)
Like numerous other municipalities across the country, Stockton leaders relied very heavily on borrowing and obviously weren't very good at saying "no" to anyone.  The most prominent issue of course is the city's pension obligations, but we should not discount the role of massive debt; this is a cautionary tale for Texas. 

"But that's just those crazy liberals in California!" you say. 

Not so fast, Pardner, we've got plenty of local debt right here in Texas.  In fact, according to the Comptroller's office, local debt has more than doubled over the last decade.  And for us Williamson County folks, we should note that while Stockton's debt burden was just shy of $1 billion, Leander School District taxpayers are now on the hook for $2.7 billion

Sadly, there are folks in local government who are adamantly defending these local debt burdens.  Leander ISD, and have even gone so far as to claim the Texas Bond Review Board numbers are, er, misleading.  LISD Board of Trustees President Pam Waggoner has been trying to assure everyone that the ISD debt isn't really such a bad thing, and, after all it was voter approved.  (By 6-8% of the registered voters.)  Surprisingly enough, she also seems to blame the State Legislature for Leander ISD's bad CAB practices:
CABs are one of several ways we handle debt . The answer to this problem is for the State Legislature to not punish us for going over the 50-cent test.
Um, say, how about not spending and borrowing so much?

Waggoner suggests that her board is 'fiscally' conservative, but as candidate Jim MacKay has pointed out, the district has essentially played a fiscal "shell game" to make it appear as though the debt were below state-approved levels. 

MacKay, who is challenging Waggoner in the May elections, has written an explanation of the LISD financial shell game, and notes that the bond writers sure are making a nice living on all this district borrowing and refinancing. 

Sadly, Ms. Waggoner has refused to meet Jim MacKay for a public debate, and hasn't even bothered to accept invitations to speak to local conservative groups.  I guess she is hoping this will all just go away?  Perhaps she's right; if things get too bad, Leander ISD could, like Stockton, declare bankruptcy.  

And we thought it was only in California.

Note:  The state legislature is taking action on the growing problem of local government debt- House and Senate Bill 5 would create greater transparency and a bipartisan coalition of lawmakers are proposing an outright ban on the CAB practices defended by Waggoner.


2 comments:

bicycle_texas said...

When I posted a question on Pam Waggoner's website asking if there was any news about a forum, my comment was deleted and, I was blocked from commenting - that's certainly not how one should treat their constituents, especially when trying to get re-elected.

Jana Palcer said...

Our family can't speak to personal knowledge of billions being wasted by Leander ISD, although we firmly believe Jim McKay's much needed and long over due account of the truth in regards to LISD's fiscal irresponsibility. But we can certainly attest to our own excruciating front row seats to hundreds upon hundreds of thousands of local tax dollars...likely one day soon to reach a million....being spent to punish us and retaliate against us for caring more about our daughter's education and future, than we do about scare tactics and caving into the good-old boy "The Leander Way". To be quite honest, Leander can keep its "Way", and all of its antiquated, inappropriate methods of both teaching children with disabilities and providing leadership for the community. In our highly attuned opinion, both are lacking and both lead to insufficient, damaging outcomes. Although we have settled out with Leander in the past and were forced again last year to seek legal intervention, there is no change, no accountability, and no end in sight. LISD, please stop spending. Please. Especially at $255.00 an hour to line the pockets of high priced attorneys who fight the most vulnerable and needy students in your care. Do right, even when its hard and may hurt just a little. It builds character. And above all, please just be honest and open and just...with constant realization that the truth always comes out it the end, because it will. It will.