Details on Bond Needed
On Thursday, your paper reported that the Executive Committee of the State Republican Party had passed a resolution overwhelmingly opposing the bond issue that has been placed on the ballot for a special election in October. I am a member of that committee. I traveled to Princeton, W.Va., and voted for the resolution opposing the bond issue.
I recognize the good things this bond issue is supposed to address. The bond issue is designed to permit significant spending on roads and bridges. There is no doubt that West Virginia needs those improvements. Many of them are long overdue. There are undoubtedly short-term positive side-effects to road construction, as well. Many good-paying jobs will be created. Afterwards, travel will be easier.
What the money will be spent on is not really a problem.
It’s the other side of the equation that is the problem. What does a bond cost? Where will that money to pay it back come from?
When an individual borrows money, we often call it a loan. No one likes to pay loans, but some borrowing makes sense. Instead of paying rent to a landlord, many people have home loans. Incurring a large debt to buy a home and paying it off a little at a time makes sense. Spending money from a family budget that would have to be spent on shelter in order to some day own a home is a choice many people make.
When the state borrows money for more than a year, we refer to that as a bond. It’s another name for a loan. Just like a loan, the borrowed money has to be paid back, with interest, over time.
In a family budget, we take the money originally and necessarily designated for shelter and spend it on home loan repayment.
In a state budget, it is simple enough to create a budget item for bond repayment. But what is the source of funds for the bond repayment going to be?
During the last legislative session, passing a budget was a contentious and difficult process. The Obama Administration’s war on coal had resulted in such a significant decline in coal mining that severance tax collections from coal mining were way down. The state had trouble passing a budget. Lots of cutting was necessary. In the end, taxes and fees had to be raised to close the budget shortfall.
Let me assume there is little fat in the current state budget. Where is the money for the bond repayment now going to come from? Higher taxes? More fees? One or the other or both is a significant possibility. I mentioned that the State Executive meeting was in Princeton. I paid $12 in tolls to travel from Charleston to Princeton and back. While I don’t live at the end of the state, and spend that money every day, it took little imagination to realize how that expense would hamper economic development south of Charleston.
Until a source of funding is identified for repaying the money to be borrowed through use of bonds, either in October or later on, West Virginia taxpayers are being asked to blindly trust in state government officials about the repayment. Some politicians were quoted as saying that as members of the Legislature, they had more information than the State Executive Committee and the voters of the state.
Perhaps that’s true.
But the voters are entitled to know what the plan is to pay off the bond. It’s a simple question. Responsible government does not try to keep that kind of information a secret from voters.
The State Executive Committee voted to oppose the bond issue without this crucial piece of information. No one buys a house without counting the cost. Neither I, nor my fellow committee members, are willing to buy a promise of new roads without counting the cost. So, what’s it going to cost? And how am I going to be asked to pay for it?
Martin P. Sheehan