{"id":8680,"date":"2017-10-10T07:00:49","date_gmt":"2017-10-10T11:00:49","guid":{"rendered":"https:\/\/www.theseventhstate.com\/?p=8680"},"modified":"2017-10-09T23:22:03","modified_gmt":"2017-10-10T03:22:03","slug":"no-win-situation-council-angers-two-influential-groups-at-the-same-time","status":"publish","type":"post","link":"https:\/\/www.theseventhstate.com\/?p=8680","title":{"rendered":"No-Win Situation: Council Angers Two Influential Groups at the Same Time"},"content":{"rendered":"

By Adam Pagnucco.<\/em><\/p>\n

Suppose you\u2019re a County Council incumbent gearing up for the next election.\u00a0 There are eight months to go.\u00a0 The economy isn\u2019t great<\/a>.\u00a0 A big, unpopular tax hike was passed a year ago.\u00a0 Seventy percent of the voters just voted for term limits.\u00a0 Dozens of challengers with all kinds of messages carrying the powerful weapon of public financing are fanning out through the county.\u00a0 So what do you do?<\/p>\n

There may not be a lot of good options these days, but antagonizing two of the more powerful groups in the county would not be a high priority on anyone\u2019s list.\u00a0 And that\u2019s what happened last Tuesday.<\/p>\n

The pebble in the council\u2019s shoe this time was debt service.\u00a0 Much of the county\u2019s six-year capital budget is financed by bonds, and of those, the biggest single financing source for projects is General Obligation (GO) bonds.\u00a0 GO bonds are not tied to specific revenue sources as some other bonds are; rather, they are backed by the full faith and credit of the county.\u00a0 The county is rightly proud of its AAA GO bond rating, the highest rating offered by credit agencies, and kept it even through the terrible years of the Great Recession.\u00a0 But maintaining a AAA rating, which allows the privilege of paying the lowest interest rates on the market, is difficult.\u00a0 When a local jurisdiction carries too much debt relative to its resources, it risks a downgrade and higher interest rates.\u00a0 County leadership is justifiably careful about this and has acted to protect its bond rating in the past.<\/p>\n

Recently, County Executive Ike Leggett requested that the council cut the level of GO bonds issued in future years<\/a>, saying that the current amount is excessive and might be regarded as a credit risk.\u00a0 Last Tuesday, the council unanimously voted to cut the six-year issue of GO bonds from $2.04 billion (the level in the last capital budget) to $1.86 billion<\/a>.\u00a0 On an annual basis, GO bond issuances would decline from $340 million in FY18 to $300 million in FY22-24.<\/p>\n

The concerns of the Executive and the council about GO bonds are legitimate.\u00a0 Bonds are paid off through debt service, which is part of the operating budget and competes with other types of spending.\u00a0 But debt service is a different kind of spending than any other county expenditure.\u00a0 Once bonds are issued, they MUST be paid one way or the other or the alternative is default.\u00a0 Below is the recent history of county debt service payments in comparison to the total tax-supported budget.\u00a0 Debt service roughly doubled between FY05 and FY18.\u00a0 As a percent of the tax-supported budget, it fell from 7.3% in FY04 to 6.0% in FY09, but has since risen to 8.5% in FY18.\u00a0 If it keeps rising, it will eventually squeeze out money for public schools operations, public safety and a range of valuable services.<\/p>\n

\"\"<\/a><\/p>\n

Much of the increase in debt service has been driven by school construction.\u00a0 The county\u2019s six-year capital budget in FY05-10<\/a> included $786 million in local funding for school construction.\u00a0 By the FY17-22 capital budget<\/a>, that total had risen to $1.4 billion.\u00a0 That\u2019s real money, folks!\u00a0 And while the state kicks in school construction money too, it could do a better job of it<\/a>.<\/p>\n

The council\u2019s cut of GO bonds is normally the kind of action that occurs after an election, not right before one.\u00a0 Now the county\u2019s elected officials are in trouble with two influential groups.<\/p>\n

The PTAs<\/strong><\/p>\n

The Parent Teacher Associations (PTAs) have one of the largest networks in the county.\u00a0 Almost every one of the county\u2019s 200 or so public schools has a PTA.\u00a0 Most have groups of officers and many have volunteer committees.\u00a0 Perhaps most importantly, most have listservs with parents on them.\u00a0 No one really knows exactly how many parents are on the PTA listservs, but it is at least in the thousands.\u00a0 The PTAs don\u2019t endorse candidates, but they have a large latent communication capacity to inform parents about the actions of politicians.\u00a0 Accordingly, they are one of the great sleeping giants of county politics.<\/p>\n

Perhaps the number one issue for the PTAs is school construction.\u00a0 Last year, they strongly supported a recordation tax increase<\/a> proposed by Council Member Nancy Floreen that was marketed at the time as being mostly intended to pay for more schools.\u00a0 The size of that tax hike (roughly $200 million over six years) is close to the size of the present cut in GO bond issuances ($180 million over six years).\u00a0 That suggests that the tax hike will be at least partially supplanted and \u2013 after capital money is moved around \u2013 will now be effectively used to reduce future debt service, not to finance additional school construction as the council promised.\u00a0 That is not going over well with the PTAs.<\/p>\n

The Realtors<\/strong><\/p>\n

The Realtors are one of the most active political players in the county, especially inside the business community.\u00a0 They spent $45,000 on direct contributions to county-level candidates in the 2014 cycle \u2013 including to County Executive Leggett and eight winning council candidates \u2013 and spent tens of thousands more on mailers promoting their endorsees.\u00a0 Nonetheless, they were targeted by the recordation tax increase and fiercely resisted it.\u00a0 If the increase were marketed as paying down debt service, which now could be the case through the backdoor, the PTAs would never have come out to support it and it would probably have died.\u00a0 Now the rationale used to defeat the Realtors \u2013 school construction \u2013 has been put in question by subsequent action of the council.<\/p>\n

The PTAs and the Realtors may have disagreed about the recordation tax hike, but they may now both see it alongside the GO bond cut as a bait and switch.\u00a0 One big group got a tax increase it didn\u2019t want.\u00a0 The other big group may not get the spending increase it did want.\u00a0 Neither group is happy.<\/p>\n

So here\u2019s the question.\u00a0 What happens next?<\/p>\n","protected":false},"excerpt":{"rendered":"

By Adam Pagnucco. Suppose you\u2019re a County Council incumbent gearing up for the next election.\u00a0 There are eight months to go.\u00a0 The economy isn\u2019t great.\u00a0 A big, unpopular tax hike was passed a year ago.\u00a0 Seventy percent of the voters just voted for term limits.\u00a0 Dozens of challengers with all kinds of messages carrying the … Continue reading No-Win Situation: Council Angers Two Influential Groups at the Same Time<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[151,32,270],"tags":[1545,2043,2044,1904],"class_list":["post-8680","post","type-post","status-publish","format-standard","hentry","category-adam-pagnucco","category-mcps","category-schools","tag-adam-pagnucco","tag-ptas","tag-realtors","tag-school-construction"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p4mKJE-2g0","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/8680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8680"}],"version-history":[{"count":1,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/8680\/revisions"}],"predecessor-version":[{"id":8682,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/8680\/revisions\/8682"}],"wp:attachment":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}