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Respect the Taxpayers

If a government sees the need to borrow for a major project, it's leaders should RESPECT the taxpayers by asking their permission before issuing bond debt.

As a freshman city council member, I watched in horrified fascination and complete helplessness as a few strokes of a pen added another $8,000,000 to Canton’s already staggering 50+ million debt. This was necessary, I was told, to complete the Canton Reservoir which was going to cost the Taxpayers six times the original “estimate”.

That was almost 4 years ago and was my introduction to the shadowy world of the “Backdoor GO Bond”. GO means General Obligation and Backdoor means bypassing the Electorate. The bonds, or “public debt”, are issued without the consent of the Taxpayers; the very people who are on the hook to pay the debt back.

Georgia law expressly prohibits cities from long term borrowing unless the Taxpayers approve it in a referendum. “Long term” is defined as a period of more than one year. This seems like very reasonable and responsible financial practice; don’t use the Taxpayer’s credit card without their permission.

For many years the law worked pretty well. If the city fathers saw a need to borrow money for a major project they went to the Taxpayers, made their pitch justifying the need for the project and then conducted a referendum where the Taxpayers would either approve or disapprove the project.  Unfortunately somewhere along the way someone figured out a very clever (and legal) way to circumvent the will of the people and the Backdoor GO Bond was born.

Here’s how it works. A city government forms a body called an “Authority”. The Authority, by law, has the ability to borrow money to build projects for the city. The Authority is made up of regular city residents. By itself, the Authority is financially helpless because it has no credit of it’s own. Now here’s the tricky part. The Authority’s financial backer is the “full faith and credit” of the city. So the Authority actually owns the project and owes the debt on the project but it cannot do anything financially such as borrowing money without the permission of the City Council. So presto, with some fancy legal maneuvering, the city is now able to borrow huge amounts of money long term without the Taxpayer’s permission, thereby circumventing and completely destroying the intent of the law prohibiting cities to borrow long term without a referendum.

This has become such a common practice that most people don’t pay it much attention. The regular folks who make up the Authorities are usually well meaning volunteers who innocently have no idea that they are taking place in a scheme to force the Taxpayers to go into debt without their permission while circumventing the intent of the law prohibiting such practice. Many well meaning elected officials simply forge ahead borrowing more and more money via an Authority issuing Backdoor GO Bonds without asking the Taxpayers just because that’s the way their predecessors did it.

The results speak for themselves. Bloated out of control government boondoggle projects are rampant. Because governments are able to borrow without the Taxpayer’s permission, there is a reduced sense of duty to responsibly manage costs; hence we get reservoirs that exceed the budget by six times.

In Canton’s case if the city leaders had bothered to ask the Taxpayer’s permission to borrow money for the reservoir, we would have gotten a much better and more cost effective project. Because the leaders would have had to justify the cost to the Taxpayers, we would have been presented an accurate budget, a much smaller gravity fed reservoir without costly pumps,  less costly real estate and legal fees, a smaller and simpler dam, and we would have been 100% owners and not a 25% minority partner. The fact is that even with a population triple our current size, Canton will need less than 10% of the capacity of the reservoir.

But as they say, “it is what it is” and we will make the best of it. We are fortunate to have a good partner in Cobb/Marietta Water Authority and it is a beautiful lake. We will eventually pay back the debt and move on, but hopefully having learned a valuable and costly lesson.

So what is the solution? Go back to basics. Learn from the mistakes of the past and don’t repeat them. Simply don’t borrow money without the Taxpayer’s permission. It’s their money and it’s their credit. If a government sees the need to borrow for a major project, it's leaders should RESPECT the taxpayers by asking their permission before issuing bond debt. It’s that simple.

 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Etowahwah January 22, 2013 at 03:10 AM
With all due respect Mr. Bryan, respect for the taxpayers begins with LISTENING to what they have to say! Based on your current and previous blogs, you seemed confused as to the fact that the taxpayer and your constituent are one in the same. You introduce and push motions through in the name of "saving taxpayers money" while in the same meetings vote to increase Council salary and spend over $50,000 to show movies at a loss in the Canton Theater. You seem to only want to respect the taxpayer when it is convenient. Therefore, what evidence have you given as to why we should trust you or your other four cronies on the fire referendum? From the last meeting, it appears there is no consensus on the overall costs or plan for fire services. You also seem to think that creating a new position for a Director of Economic Development will suffice for a lack of vision for the city. A downtown business owner that will soon be leaving Canton recently made a wise observation: Canton needs less politics and more culture. In your last year in office, please demonstrate your respect for the taxpayer by, first and foremost, listening to us, even when we disagree with you.
Change For Canton January 22, 2013 at 04:03 AM
So is that a "sorry"....tax payers should just trust you after the vote next time? Thanks for the clarification.
Bill Bryan January 22, 2013 at 02:11 PM
The angry detractors, negative spin artists, and "monday morning quarterbacks" will always be with us as illustrated by the two comments above. We on the Council are just regular people who choose to devote a good deal of our time to bettering the community. Being dogged by a handful of perpetually unhappy misfits just comes with the territory.
Living in the County January 22, 2013 at 06:14 PM
Mr. Bryan your last comment is laughable. These are not a handful of "perpetually unhappy" but those individuals who are concerned about the welfare of the City of Canton. There are many more concerned individuals that don't live within the city limits. They love the downtown and find it appalling that the City spent more than $30000 on Christmas lights and then, when you made the motion at one meeting to send them back, Mr. Beresford simply said, "... the are already here." Did you think to box them up and send them back? No.
Bill Bryan January 23, 2013 at 03:23 AM
I actually did ask about returning them. The answer was that it was too late this year to swap them out for different ones; therefore we would have had no lights for Christmas. Be assured, we would have had complaints if we had done that too. I have made it known through blogs and emails that if any interested parties want to offer their advice or input to the Tourism Board about different lights it would be welcome. Now is the time, not next December. The Council would be willing to listen to and consider all suggestions from the Board. With all due respect your comment of, "Did you think to box them up and send them back? No". is a perfect example of the monday morning morning quarterback I was speaking of. Also I have seen zero effort expended by the handful of Christmas Light Complainers who were so vocal when the new lights went up. And yes those two making comments above are in fact perpetual complainers who have never offered anything constructive except "throw the bums out"; the typical generic solution of those too lazy to expend any meaningful, constructive effort.
Change For Canton January 23, 2013 at 01:23 PM
Throwing the "bums" out would be a good solution. However, not one that is going to happen until November! Rest assured, the three up for election will not get to ruin our city with another term. As for always complaining Mr. Bryan, give us something to be happy about that is not backhanded or shady. By the way, it was more than a "handful" that were displeased about the Christmas lights...as evidenced by the article hits and votes in the tribune poll. 91% were not happy with the lights. http://www.cherokeetribune.com/view/full_story/20986006/article-Shedding-light-on-Canton-decorations?instance=blog_main
Change For Canton January 23, 2013 at 01:24 PM
Oh and most importantly...no one ever shares your blogs on Facebook...I think you may have lost the favor of the people Mr. Bryan.
Karen Jackson January 24, 2013 at 03:39 PM
This is the way a Canton City Councilman say's I am sorry? What is the point of this post? The council was not responsible enough to handle the reservoir project with the budget given. I don't think it would have mad a difference if it were put to a vote or not. Now, from what I understand, you want to put the fire issue to a vote? I am afraid with this kind of funds management history, it will not pass. The public will need very specific details from the appropriate people. I have to say, from the people I have spoken with...this district is not favorable. Also, from what I have seen of your "council meetings" - I don't see how you, as a group, are qualified to manage anything.
Bill Bryan January 25, 2013 at 02:29 AM
Etowahwah, respect is a two way street. Until you have enough respect for me to identify yourself like Mr. Saro and Mr. Brown, your "dialogue" will be nothing more than meaningless noise and a minor distraction. Same goes for your other half, Change for Canton. I doubt that either of you even live in the city.
Bill Bryan January 25, 2013 at 03:08 AM
Ms. Jackson after re-reading my post I can see how it might lead one to believe that there is some element of apology included. There was none intended. I voted NO on the $8,000,000 reservoir GO Bond. All other reservoir funding decisions were made before my time in office. Additionally, there was not one single member of the current council in office when the decision was made to build the reservoir. I am certainly not apologizing on behalf or previous councils either; nor am I faulting them. Every single one of them are fine, upstanding citizens who made their decision based on the information they were given at the time. And I must take strong exception to your assertion that, "I don't think it would have mad a difference if it were put to a vote or not". Absolutely yes it would have made a difference. Please understand my point here. This council is trying to do it right. Instead of simply ramming another multi-million dollar debt down the taxpayer's throats as was done in the past, we are offering the taxpayers the opportunity to decide for themselves if they want additional fire stations. Very specific information will be coming in the near future.
Karen Jackson January 29, 2013 at 03:23 PM
I have researched more and I have decided that the council is not responsible enough to conduct this business for the city. We are in the process of forming a committee in our neighborhood to defeat the fire referendum. With the purpose of waiting till we have a functioning and competent council in place. The people of Canton have no faith in your leadership and it will show. Sorry.
Jeff Brown February 27, 2013 at 05:22 PM
http://canton-ga.patch.com/blog_posts/reasons-to-just-say-no-to-the-proposed-fire-bond-referendum

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