Date: Mon, 18 Jun 2001 14:34:29 -0400
From: bobhunt@erols.com
Subject: [lpaz-repost] (fwd) Bypassing Voters on Debt
To: american_Liberty@egroups.com, Individual-Sovereignty@egroups.com, sierratimes@egroups.com, lpaz-repost@yahoogroups.com, TnLP@egroups.com


On Mon, 18 Jun 2001 01:56:44 -0400, "Alexandra H. Mulkern"
<amulkern@Radix.Net> wrote:

Wall Street Journal

June 18, 2001

Bypassing Voters on Debt

It's been a quarter century since New York's Urban Development
Corporation defaulted on its debt and plunged New York City into fiscal
chaos.  Times are better now and memories dimmer, which explains why
cities and states are once again creating independent entities that are
taking on massive debt without voter approval.

Only two states will elect a Governor this year, and in both New Jersey
and Virginia the issue of runaway debt is a growing concern.  No one
argues against taking out debt for legitimate capital projects.  But
most states limit that debt by requiring voter approval.  hat check on
abuses is breaking down as government-controlled entities issue bonds
and ignore constitutional restrictions.

In New Jersey, former Governor Christie Whitman more than tripled the
state's indebtedness.  Just before leaving to become EPA Administrator,
she signed an $8.6 billion bond to rehabilitate school buildings.  New
Jersey law requires voter approval of debt that exceeds 1% of the
state's budget, but the state's pols argued that because the new
borrowing will be charged to an independent agency it isn't "general
state debt." A court rejected a lawsuit by Bogota Mayor Steve Lonegan
against this charade, and the case is now pending before a state
appellate court.

Jersey City Mayor Bret Schundler, a GOP candidate for Governor, has made
the soaring costs of school construction an issue.  He says his city's
experience in opening charter schools that operate outside the maze of
existing rules and use vacant buildings could work statewide to improve
education and negate the need for more debt.  His conservative themes
are helping him close the gap against former GOP Congressman Bob Franks,
who now leads him on by only five points in a new Public Opinion
Strategies poll.

In Virginia, local governments have made an art form of doing end-runs
around laws requiring voter approval of debt.  After Loudoun County
voters rejected a $36 million government center, it was built anyway
using a lease-purchase agreement not subject to a vote.  As one Loudoun
supervisor said, "If they say no, then you look for another means of
financing." The problem is that during the 1990s lease-purchase deals in
Virginia were defaulted on a total of 42 times.

Nonetheless, last year Virginia's legislature passed a bill to allow
cities to establish special bodies to issue bonded debt without voter
approval.  Only a veto by Governor Jim Gilmore blocked it from becoming
law.  A new debt study by the Virginia Institute for Public Policy will
put some heat on both candidates for Governor to show how they stand on
this kind of flimflm.

New York City began getting into trouble in the 1960s when bond lawyer
John Mitchell, later Richard Nixon's Attorney General, created bonds
that were secured only by future government revenues.  When asked if
this was "a form of political elitism that bypasses the voter's right to
a referendum,"
he replied: "That's exactly the purpose of them." Today, official U.S.
local government debt is estimated at $1.2 trillion, but the creation of
dodges like independent agencies that issue their own debt may mean the
real figure is as high as $4 trillion.  It's time voters learn about how
their rights to vote on debt are being trampled, and the Governor's
races in Virginia and New Jersey this year look to us like good places
to start.








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