Raise the Debt Ceiling Rap

From the folks at ReasonTV, it is the Raise the Debt Ceiling rap.

Sphere: Related Content

Impertinent Observations (Debt Ceiling Edition)

The current jockeying by either side of the aisle up in DC over this debt ceiling business seems to bear out the old saying that politics is the art of the possible – and to a certain extent, therein lies the problem.

Rather than go down any number of potential rabbit holes – the arbitrary date set for raising the debt ceiling (just the latest of many such arbitrary deadlines), the fact that not raising the debt ceiling is not the same thing as default on the debt, the fact that even if the debt ceiling is not raised the feds would have plenty of income to meet their debt service obligations (paying off bonds and interest as they come due), the fact that the federal government has avoided the hard choices that would be imposed by a budget (by operating without one for years now), and the fact that all of the new spending approved over the last couple of years (Obamacare, unspent stimulus money, etc) is off of the table – I want to comment on the bigger picture.

I feel quite strongly that one’s policies and votes need to be grounded in a defensible political philosophy.  That is why I went to such great lengths to articulate my political philosophy when I ran for the District 1 seat on the Athens-Clarke County Commission in both 2002 and 2006.

On the other hand, political philosophy does not properly operate as an abstraction only; one of the reasons I hold Raymond Aron in such high regard, though his was much to the left of my own thinking, is his recognition that while political theory is all well and good, politics must be brought down to a concrete level if anything is to be accomplished.  That is the reason that I abandoned the Libertarian Party back in the late 1990s; far too many in the LP regarded compromise as a sell-out of principles, irrespective of the fact that success in politics is predicated on the give-and-take of competing interests.  And now I fear that conservative in the GOP, with whom I agree, may make the same mistake.

I fully believe that not raising the debt ceiling would, in the long run after much political wailing and gnashing of teeth, be a net plus for the country in that it should force the powers that be to rethink their spending policies.  Unfortunately, though, that is not going to happen.  The debt ceiling is going to be raised - the only real questions concern the particulars.

That is where compromise comes in.  While I fully agree with the philosophical position that raising the debt ceiling is not the best course of action to take, the political realities are that it is going to be raised.  Republicans on the Hill may be excused for crafting the best practical policy out of it that they can.

Thus, we are left to consider the Boehner plan.  Those on the Right may have to hold their collective nose in order to vote for it - an amalgam of $1 trillion in new debt, $1.2 trillion in budget cuts over the coming decade (I know, I know), and a promise of $1.8 trillion in deficit reduction later this year - but it is a damned site better than Harry Reid’s Senate alternative or anything likely to come out of the Obama White House.   As this WSJ editorial explains (much better than could I), the ball is in the GOP’s court; I pray that they don’t blow it and get blamed for whatever may follow as they surely would, irrespective of where the fault really lay.

Another aspect of this debt ceiling business is the absurdity associated with the credit rating assigned to US Treasury bonds.  As a measure of how government involvement creates perverse incentives, we are presented with the prospect that the credit rating of the United States government may get downgraded . . . if it refuses to incur even more debt that it cannot hope to pay off?  That, of course, is precisely the opposite of what should be happening.

Besides, as Holman Jenkins points out in this WSJ column, any downgrade of the bonds is an essentially pointless exercise.  Unlike many claims on the US Treasury (discretionary spending, Social Security, Medicare/Medicaid, etc.), the feds are legally obligated to pay off the bonds – so those are the last things to go to the chopping block.  Even that does not matter, though, because the Treasury can (and will) pay off the bonds using dollars that have been devalued by inflation.  From a certain and limited perspective, the government cannot lose (though the rest of us will not be so lucky).

To borrow a line from Glenn Beck, it makes your head feel like it is going to explode.

Sphere: Related Content

SCHS Pigskin Preview

After a mightily disappointing 2009 season, my alma mater Indians returned to their usual winning ways in 2010, going 8-3 overall, 4-1 in conference play, 3-1 at home, 4-1 on the road, and 1-1 on neutral fields.  SCHS finished the season by losing in first round of state playoffs to eventual AAA runner-up Carrollton.

Here is the warpath for this season:

12 August - Habersham Central (8AAAA) at The Reservation for a “Battle of Currahee Mountain” scrimmage

26 August - Elbert County (8AA South) at Elberton

02 September - Hart County (8AA South) at The Reservation

09 September - Oconee County (8AAA Division B) at The Reservation

16 September - West Hall (8AAA Division B) at Oakwood

23 September - Open

30 September - Franklin County (8AAA Division A) at The Reservation

07 October - Chestatee (8AAA Division A) at Gainesville

14 October - White County (8AAA Division A) at The Reservation

21 October - Lumpkin County (8AAA Division A) at The Reservation

28 October - North Hall (8AAA Division A) at Gainesville

04 November - Play in game

See information on the 2011 Indians at the SCHS football web site, MaxPreps, and Home Teams Online.

Sphere: Related Content

Athens-Clarke County Redistricting

Blake’s story from yesterday about local redistricting certainly proved timely, as I was just putting the finishing touches on my next column about state and local redistricting (scheduled to run on 24 July).

To recap the local doings, the redistricting committee named by Mayor Denson is in the process of drawing new maps for the Athens-Clarke County Commission and the Clarke County Board of Education. Public hearings will be held on those maps in August.  They will go to the Commission in September and be voted on in October.  They will be forwarded to the Clarke County’s legislative delegation in the General Assembly in November, with passage by the full legislature to follow during the 2012 session.  Then, it is on to the Department of Justice for sign-off pursuant to the Voting Rights Act.

Sphere: Related Content

APS - Making A Difference, Indeed

Atlanta Public Schools, the system with the third highest per pupil expenditure in the state, has been found to be guilty of “widespread cheating” with regard to 2009 CRCT scoring.  Also, the report noted that “a culture of fear, intimidation, and retaliation existed in APS, which created a conspiracy of silence and deniability with respect to standardized test misconduct.”

Some specifics of note:

• Cheating was found in 44 of the 56 schools examined

• 38 of 56 principals were found to be either responsible for or directly involved in cheating

• 178 teachers and principals cheated, of whom 82 confessed

• 6 principals cited the Fifth Amendment to avoid answering any questions

• Cheating occurred as early as 2001

• “Significant and clear” warnings of cheating were sounded as early as 2005 but were ignored

• APS was guilty of “a major failure of leadership . . . with regard to the ethical administration of the 2009 CRCT”

• Other improper conduct included several open records act violations, instance of false statements, and instances of document destruction

These findings will be turned over to local district attorneys for possible criminal prosecution.

No, this is not an indictment of all public education - but it sure as hell illustrates the potential for administrative misconduct on the part of those entrusted with our children's educations and our tax dollars.

As an aside, the two school systems that had higher per pupil expenditures for FY 2010 were Baker County (357 students) and Clay County (294 students).  Naturally, school systems of such a miniscule size have little opportunities to employ economies of scale insofar as fixed administrative and capital costs are concerned, thereby driving their per pupil expenditures up.  By contrast, Atlanta Public Schools (47,947 students) has approximately 74 times as many students as Baker and Clay Counties combined.

Addendum – Read the full report here:

Volume 1 - Overview, School Summaries

Volume 2 - School Summaries, Continued

Volume 3 - "Targets," Culture of Fear, Allegations of a Cover-up, etc.

Sphere: Related Content

District 113 Update

The race for Georgia House District 113 has shaken our pretty much as anticipated.  The three Republican candidates split 73.3% of the vote, with Chuck Williams polling 38.8%, Sarah Bell polling 18.3%, and Alan Alexander polling 16.1%.  Dan Matthews, the lone democrat in the contest, garnered the totality of the blue vote by polling 26.7%.

In Oconee County, which forms the bulk of the district, Williams’ racked up 1271 votes to Matthews tally of 505 votes , Bell’s 504 votes and Alexander’s 421 votes.

As expected, Matthews’ strength lay in Clarke County, where he lead with 442 votes to Williams’ 128 votes, Alexander’s 119 votes and Bell’s 117 votes.

In Oglethorpe County, Alexander lead with 75 votes to Matthews’ 66 votes, Williams’ 61 votes, and Bell’s 51 votes.

Finally, Williams place first in Morgan County with 62 votes to Bell’s 41 votes, Matthews’ 36 votes and Alexander’s 18 votes.

The overall turnout was an appallingly low 11%; the turnout for the run-off will probably be even less.  Be that as it may, now that the contest is down to one Republican to one Democrat, the advantage obviously belongs to Williams.  The only way he can lose is if his supporters, along with those who voted for Bell and Alexander stay home – which, of course, is entirely possible.

Sphere: Related Content

District 113 Campaign Web Sites

Here are the campaign web sites for each of the candidates for Georgia House of Representatives District 113:

Alan Alexander (R)

Sarah Bell (R)

Dan Matthews (D)

Chuck Williams (R)

Sphere: Related Content

District 113 Special Election

As I point out in my upcoming column for the Banner-Herald, which I think will run on Sunday, 12 June, the partisan voting patterns revealed in the four elections held in Georgia House of Representatives District 113 as it is currently configured do not bode well for any Democrat.  Yes, the special election is “non-partisan," but that means that it will not be preceded by party primaries – not that candidates’ party affiliations will not appear on the ballot.

 

That being the case, Dan Matthews may have already started hedging his bets.  I see that his blog, formerly known as “Oconee Democrat,” as the URL still plainly indicates, has been recast as “Oconee County, GA Politics.”  I don’t know when that transformation took place – but I find it of note, nonetheless.  Also, I heard an early round of Matthews’ campaign spots on WGAU in which he was noted to be a former “Oconee County Committee Chair.”  Pointedly absent from the terminology, however, was the operative word “Democratic.”

On 09 May, before announcing his own candidacy, Matthews wrote on his blog (and what functions as his pseudo campaign web site), “I would be happy to support her [Bell] in the seemingly inevitable run off but only if she announces as soon as possible.” 

I find Matthews' candidacy interesting, as Bell did just that as noted in this article in the following day's edition of the Banner-Herald.    Also, according to the Secretary of State’s web site, Bell qualified for the election the day before Matthews did: Alan Alexander and Chuck Williams qualified on Monday, 16 May, and Sarah Bell followed on Tuesday, 17 May.  Matthews was the last to qualify on Wednesday, 18 May.

As noted above, Matthews appears to be using his blog as a pseudo campaign site.  Alan Alexander has a dedicated campaign web site.  To the best of my knowledge, neither Bell nor Williams have campaign web sites, but the former distributed this handout at a recent meeting of the Clarke County Republican Party.  Speaking of which, all four candidates are expected to be at the next meeting of the CCRC, scheduled for Monday, 13 June.

I’m not picking on Matthews, it is just that I know little about the other candidates.  Alexander appears to have the political connections, but has some issues; Bell has lots of community service experience; Williams is an unknown to me, other than what I’ve read in the newspaper about the bank failure.

Addendum - Here is the campaign web site for cCuck Williams (thanks to Shawn): http://www.votechuckwilliams.com/.  Also, sorry for the weird formatting of this post; I used a word processing progam other that WORD and it appears that Blogger doesn;t like it very much.

Sphere: Related Content

Sunday Sales & SPLOST 4 Referenda

Here is an excerpt from a Banner-Herald story about Athens-Clarke County’s anticipated Sunday sales referendum from about ten days ago:

Commissioners had considered placing Sunday sales on the ballot in November but opted not to because of a conflict with a November vote on continuing a 1 percent sales tax for local schools.

"We don't want to clutter up the ELOST vote," Commissioner Alice Kinman said. "I don't think it's good to have those two hitched together."

Commissioners say they are concerned that Sunday sales could draw opponents to the polls who also would vote against the Education Local Option Sales Tax, which will fund school construction.

County elections are on an even-year schedule, and Athens-Clarke County would have to pick up the $54,000 tab for a special election this year, an expense the Clarke County School District budgeted for but Athens-Clarke County did not.

"I just don't see how you could justify the cost," Commissioner Doug Lowry said.

A couple of thoughts come to mind.

The first is that the scheduling of referenda, either directly on SPLOST questions or other matters, by the Unified Government and/or Clarke County School District so as to rig the turnout to get a preferred outcome is yet another reason that Georgia's SPLOST law needs to be rewritten.  The idea of splitting the Unified Government’s Sunday sales referenda from the CCSD’s SPLOST 4 referenda so that our betters can prevent the wrong people from voting on both issues simultaneously is inappropriate and condescending.

The second is that City Hall’s preference for a March vote out of monetary concerns rings hollow.  Both November 2011 and March 2012 fall within the Unified Government’s FY 2012 budget, which has already passed.  If funds for a vote in November were not in the budget, were funds for a vote in March?  If so, why?  And if so, could not the funds be used just as easily in November?  If not, the supposed preference for the latter date due to fiscal concerns is specious.

Besides which, if the Commission wanted the vote in November, it would find the money for it, just money has been "found" over the years for all manner of expenditures.  As Kinman makes quite clear, the concern of our betters in government is political, not fiscal.

In the event, I will vote for Sunday sales and against the CCSD's SPLOST 4.  The fact that it will take two trips to the poll separated by months will have no effect whatsoever on my positions.

As an aside, Georgia’s presidential preference primary is scheduled as part of Super Tuesday in February 2012, but that is not one of the opportunities for ballot questions specified by state law.

Sphere: Related Content

Property Tax Primer Followup

I posted what appears below on AthenTalks as a follow up to my most recent column about how property tax is determined.

A chart detailing the various millage rates charged in each of Athens-Clarke County’s five tax districts used to be posted on the Tax Commissioner’s web site; I could not find the chart on City Hall’s new and improved (and expensive) web site. Upon speaking with the staff at the Tax Commissioner’s office so as to verify my information, I was told that they will try to get that chart reposted. In the interim, see page 7 of this from the Georgia Department of Revenue for the current breakdown of millage rates here in Athens-Clarke County (does not have the rates for Bogart and Winterville).

For listings of exemptions, see these from the State of Georgia and these from Athens-Clarke County.

For discussions of assessments, see these from the State of Georgia and these from Athens-Clarke County.

While they do not apply to most cases, there are a couple of “preferential” assessment categories (rehabilitated historic property or landmark historic property) and several “special” assessment categories (preferential agricultural property, conservation use property, environmentally sensitive property, farm land property, brownfield property, residential transitional property), a category for timberland (standing), and one for equipment, machinery, and fixtures.

For the provisions of SB 346 that mandate annual assessment and estimated tax notices, see O.C.G.A. §48-5-306.

Then there is this from a blog posting over at TOA from June 2008:

Back in 2007, the Clarke County School District’s SPLOST 3 bond resolution included a provision that, should the limited duration sales tax be insufficient to repay said bonds, any shortfall would be added to the CCSD’s portion of the local property tax millage rate. Longtime readers may remember that I had two specific concerns with regard to any such transfer of bonded indebtedness to property taxes.

My first concern dealt with the 20 mills limit imposed by the state Constitution. The CCSD’s portion of the local property tax millage rate has been at the 20 mills limit for years; to exceed that limit would normally require the voters’ approval to do so via a referendum. So how could that line be administratively traversed so as to make up a SPLOST revenue shortfall without a referendum?

After a (very) long and circuitous journey through a variety of local and state government bureaucracies, the Attorney General’s office provided me with the relevant Georgia Supreme Court case law, Seaboard Air-Line Railway Company v. Wright, comptroller-general, et al., from way back in 1927, that exempted bond debt service from any constitutional limit. I do not agree with the reasoning embodied in that decision, as it would seem to render the rationale for the 20 mills limit moot, but the case law is what it is.

Satisfying my second concern has proven somewhat more vexing. The CCSD’s bond resolution cited a provision contained in the Constitution as expressly permitting the transfer of bonded indebtedness from SPLOST sales taxes to property taxes. That resolution read in part (see the second paragraph on page 5 of the PDF):

WHEREAS, Article IX, Section V, Paragraph VI of the Constitution of the State of Georgia requires that prior to the issuance of general obligation bonds, a tax must be levied in amounts sufficient to pay the principal of and the interest on the Bonds as the same become due and payable, to the extent that the revenues from the Sales Tax are not sufficient thereof;

The resolution was littered throughout with similar language. Being a nerdy type reasonably familiar with the verbiage in the Constitution, this immediately struck me as odd. Sure enough, when I went to the document itself, no such provision was anywhere to be found. The actual text of Article IX, Section V, Paragraph VI of the Constitution reads (see page 81):

"Levy of taxes to pay bonds; sinking fund required. Any county, municipality, or other political subdivision of this state shall at or before the time of incurring bonded indebtedness provide for the assessment and collection of an annual tax sufficient in amount to pay the principal and interest of said debt within 30 years from the incurring of such bonded indebtedness. The proceeds of this tax, together with any other moneys collected for this purpose, shall be placed in a sinking fund to be used exclusively for paying the principal and interest on such bonded debt. Such moneys shall be held and kept separate and apart from all other revenues collected and may be invested and reinvested as provided by law."

There is no mention whatsoever of transferring bonded indebtedness from a sales tax to property tax, just a general provision that a sinking fund to repay bonds be in place before such bonds are issued. Explicitly contrary to my reading of the CCSD’s resolution, the Constitution is mute on the subject of transferring any shortfall in sales tax collections to property tax “to the extent that revenues from the Sales Tax are not sufficient therefore.”

After an even longer and more circuitous journey through a variety of local and state government bureaucracies – the Attorney General’s office clammed up on me this time – I eventually discovered, after speaking with a bond attorney over in Atlanta, that the answer can be found in O.C.G.A. §48-1-121(c):

"No general obligation debt shall be issued in conjunction with the imposition of the tax unless the governing authority of the county or qualified municipalities within special district issuing the debt determines that, and if the debt is to be validated it is demonstrated in the validation proceedings that, during each year in which any payment of principal or interest on the debt comes due the county or qualified municipalities within special district issuing such debt will receive from the tax authorized by this part net proceeds sufficient to fully satisfy such liability. General obligation debt issued under this part shall be payable first from the separate account in which are placed the proceeds received by the county or qualified municipalities within the special district issuing such debt from the tax authorized by this part. Such debt, however, shall constitute a pledge of the full faith, credit, and taxing power of the county or qualified municipalities within the special district issuing such debt; and any liability on said debt which is not satisfied from the proceeds of the tax authorized by this part shall be satisfied from the general funds of the county or qualified municipalities within the special district issuing such debt."

Okay, that answers the question as to on what legal basis a shortfall in SPLOST sales taxes may be transferred to property taxes, though it is not explicitly stated in that manner.

But the question remains: why did not the CCSD’s bond resolution cite this section of state law? Why make language up out of whole cloth and claim that it is in the Constitution, when a few seconds on the Internet reveals that claim to be patently false?

Finally, consider the games that can be played with millage rates when they are considered irrespective of the “rollback rate“. This from another TOA post from May of 2009:

The 0.3 mills reduction in 2004 was due solely to the work of members of the Clarke County Republican Party, who analyzed the budget and presented a list of potential reductions to the folks down at City Hall. To their credit, the Mayor and Commission did adopt many of our recommendations, thereby “freeing up” funds for a millage rate reduction. It should never be forgotten, though, that the original plan was simply to spend the new revenue generated by growth in the tax digest (this last part always seems to get left out of the discussion).

The 0.6 mills reduction in 2005 was a sham, pure and simple. The millage rate reduction was offset by the institution of the stormwater utility fee (even the Unified Government’s budget documents acknowledged this) which, by design, also hit those property owners such as churches and schools who are exempt from property tax. Now, we will have the situation where the millage rate is back to within 0.2 mills of where it was prior to the imposition of the fee – a fee that will be with us forever regardless of future millage rate hikes. Because of increases in assessments the “rollback” rate in any given year may well be lower that the millage rate - so property taxes can actually go up if the millage rate stays constant or, in some cases, even goes down.

For what it is worth, my assessment and estimated tax notice arrived in the mail on Friday; after increasing in 2008 and remaining the same in 2009 and 2010, this years fair market value dropped (finally) by 11.61% - as well it should have.

Sphere: Related Content