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In the early days of the rec center discussions, it was told by a proponent that I was too dense, to put it kindly, to understand the proposed financing.
Being the first to recognize that I may not be the brightest bulb in the house, I went looking for information to help me understand. Sure enough, I was a bit off track in my understanding.
I’ve always thought a loan through a bond issue was similar to a home mortgage. In a home loan, the home is the collateral. If you don’t pay, the bank will own your house.
Bonding companies don’t want to own a rec center, so they insist on cash collateral. In this case, almost three million of our sales tax dollars is pledged every year until the bond is paid off. Those pledged dollars are no longer available to collateralize new bonds or loans. In light of that, aren’t we mortgaging the next decade or two of our future?
When told in those early days that the bonding company would send us $1.5 million when the bond was placed; I said: “You’re out of your mind. Nobody is going to pay you to borrow money.”
Once again, I did not clearly understand the situation. Somebody will pay you to borrow money. The trick is to get you to agree to excessive enough interest rate that the bond buyer still makes a respectable profit even after paying that premium. Who pays for this premium? You, the tax payer, naturally. The unappreciated and unrecognized payer in this game of dubious finance. The taxpayer is reduced to a mere means to an end.
And where does this one and a half million dollar payment go? The payment, which if left in our local economy, could support dozens of jobs? It’ll go to that out of town banker who will happily distribute those profits to his now wealthier bond holders. Believing in capitalism, those bond holders are entitled to a reasonable profit on their investment. They’re not entitled to an unreasonable return at the expense of Pagosa Springs’ and Archuleta County’s taxpayers.
The proponents will also tell you that the center is self-funding. Self-funding is when your receipts are more than or equal to your expenses. With an annual debt payment of one and a half million dollars and an operational shortfall of half a million; against an overly optimistic receipts estimate of half a million, does not seem to me to be self-funded. It appears to me to be about two million dollars a year short of self-funded.
When we start defining taxes as income to support a business plan that could not function without it, we’ve indeed stepped onto a slippery slope.
Could one of the wisest of our Founding Fathers, Benjamin Franklin, been thinking of this kind of logic when he warned: “When the people find that they can vote themselves money, that will herald the end of the republic.”
Do the responsible thing and vote no on A.