Bondage in Oregon: You Pay for the Deception

This isn’t about deception in the “casual encounters” section of Craigslist personal ads. Rather, it’s about the true cost of state and local government bond sales — ultimately, your debt. Voters in a five-county area recently passed a much-touted $374 million Portland Community College bond measure. But, add in the interest and, as PCC spokesman Dana Haynes told me, taxpayers will pay $550 to $590 million — more than a half-billion dollars — over the bond’s 20-year life. That bigger-than-half-billion-dollar figure was not in pro-debt pre-election editorials, newspaper articles, commercials or political “educational” materials. Skip forward. Gov. Kulongoski proposes to increase taxes and fees and sell $600 million in economic-stimulus-elixir bonds. Yesterday I called the governor’s office to get the total cost of Kulongoski’s proposed debt. I’m waiting for an answer. However, it is reasonable to approximate that his $600 million bond sale would approach $1 billion in new debt. When you buy a home, the government requires that you be informed about the pay-off amount, which includes the interest. Oregon governments owe residents the same consideration. Write or call the governor’s office (503.378.3111 or 503.378.4582); ask for the true cost of Kulongoski’s debt. After all, you’ll foot the bill.

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Posted by at 06:00 | Posted in Measure 37 | 20 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Roger

    I’ve made the same point regarding Urban Renewal projects and the debts that must be paid, with interest, entirely from property taxes over decades.

    It has become standard operating procedure to mislead the public when it comes to Urban Renewal. Blatantly false claims are routinely made by jurisdictions seeking approval of Tax Increment Financing schemes. There are many examples but some are so stunningly dishonest it might as well be called fraud.
    For instance when a city attorney states in a public hearing that “ALL of the Urban Renewal revenue would be generated by the proposed project.”
    This particular UR plan, requiring voter approval, was presented as a $22 million plan to makeover the downtown of a local city. However, the not so touted details revealed the plan would divert $39 million PLUS in property taxes from 198 acres covering nearly all of the existing downtown area. 25 PLUS years would be needed to retire the debt. Other egregious misrepresentations are common place with the advancement of municipal and county Urban Renewal proposals. The problem is so bad that many public officials, entrusted with oversight and the public’s interests, are themselves under the wrong impression when considering these plans.
    Unfortunately this disingenuous template for advancing Urban Renewal has been fine tuned and made slick by the League of Oregon Cities and distributed to every jurisdiction. Recently this con job called TIF has risen to new heights in diverted funding, underestimated project costs, inflated revenue projections and the need for additional funding in the face of project visions failing, miserably, to come to fruition.

  • Jack Drummond

    Great post Kurt. Keep us posted.

  • Dale Morris

    Weber is exactly right. The value of this bonding must be viewed in relation to its total costs, not its down-payment (or advertised) cost.

    To take Weber’s home mortgage analogy even further, most mortgage holders are surprised (shocked even) to see the lifetime interest costs when they are displayed on the mortgage docs at closing. Had the borrowed been made aware of those lifetime costs well in advance of signing day, opportunity cost decisions and trade-off concerns would have been, most likely, better balanced. The same goes for these bonds. Truth-in-Lending rules should also apply to bonding.

    Would we willingly shackle our kids if we had better info?
    Dale

    • Bono

      Debt used to be a bad word, now it is just ignored.

  • DZKeith

    Интересные посты – это ваш стиль безусловно!

  • Bob Clark

    Another big scam in state and local government is pension funds for union employees. Unions dominate campaign funding. This enables them to “buy off” elected officials, who then negotiate with these same unions to establish government union employee wages and retirement benefits – A form of self dealing that goes largely un-noticed. The government unions have been so greedy in pursuit of retirement benefits many local governments including Portland and others are under huge ever expanding pension obligations. Something will eventually give and tax payers are likely to get hit hard by tax increases to fund over generous government employee pension benefits. This is a ticking time bomb as illustrated by California’s recent request for several billion dollars from the federal government to keep their pension obligations from over-running the state’s ability to pay.

  • Lee

    Additions to Roger’s comments:

    PDC and other jurisdictions are misusing urban renewal. They claim that only the fixed “maximum taxpayer dollars” established at the beginning of a UR district (formulated by state statutes) will be spent.

    Totally false.

    For example Portland’s North Macadam Urban Renewal District maximum public debt is tagged at $289M. But like Roger states, the debt costs of the bonds are not included on top of the $289M. But there are also many other categories of tax dollars not included.

    Property Taxes are collected from Portland’s property owners to pay for the operation of PDC to the tune of over $290M to run eleven UR districts. PDC has no accounting of how much is spent in each district for all the staff time and economic development, lending, etc. programs used to promote each district. NM is the largest and the most expensive ever of all the districts. $60M per year for NM could be a reasonable guess.

    There are also numerous other governmental agencies that are contributing tax dollars to NM: federal, state, Metro, Trimet, other city bureaus, etc, in so many ways. The state has committed over $30M of taxpayer dollars just for one transportation project in NM. No one has a grasp of the tax dollars that will be spent beyond the district “fixed dollars” for the Milwaukie Light Rail line through the district. It will be substantial.

    There is also all the Local Improvement Districts, TDSC and other in-district devices within the district that in an indirect way contribute to the tax dollars to the district beyond the “fixed”.

    There are also the tax break subsidies that are being used in the district that deprive governmental agencies of revenue like TODs (Transit Oriented Development), and Affordable Housing tax breaks, etc. Taxpayers of the remaining non-urban renewal areas of the city must make up the difference for the city to operate. Nor are the tax exempt entities like OHSU, PSU, etc. in the district contributing to the repayment of tax dollars.

    Four years ago an Urban Planning professor at PSU roughly estimated that for the life of the NM district, if it lasted for just the 20 years proclaimed period, it could approach costing taxpayers over $1.2 BILLION dollars. Several costs mentioned above were not even included. And don’t forget that all UR districts in Portland have been extended beyond 20 years and all these costs compound.

    The debt cost is the biggest expense of urban renewal. What is so amazing is that PDC staff on several occasions has stated that debt cost is not a cost they include in cost of a district or projects in districts. This thinking certainly helps explain why this nation, this region and this city is in the fix were in. Roger’s point is even more devastating when true costs to taxpayers are calculated.

  • Jerry

    Bonds are a great way to go because the problems they cause don’t come unitl later.
    This Ted guy is really, really smart.
    I like it. He should be applauded for his courage in sending Oregon further and further into debt. It is what we must do to save jobs.
    I, for one, thank Ted for his brave, brave stand.

  • eagle eye

    Gee, uh, duh, you have to pay interest on a loan, nobody ever thought about that, what a shock.

    When I say how much I paid for my house, I tell the selling price — not the total amount of the mortgage.

  • Anonymous

    “When I say how much I paid for my house, I tell the selling price — not the total amount of the mortgage.”

    No kidding?
    Is that suppose to be the same thing?

    Well knucklehead, when figuring out what you can afford or how much of your pay check you’ll have to shell out for the house payments do you leave off the interest?

    The North Macadam UR plan called for $288 million to be spent. That’s a comedy figure now but the original plan also called for another $160 million in interest to be paid during the first 20 years.
    Most of which will have to be paid with proerty taxes.
    Most of which would have been collected by the basic service jurisdictions even without any of the UR plan occuring.

    • eagle eye

      “Is that suppose to be the same thing?”

      No, that’s the whole point, if you have enough sense to appreciate it.

      For your information, my mortgage is paid off. So I guess I did OK at figuring out the math.

      Look, most people are well aware that there is interest on bonds, and are quite satisfied to live with it.

      The strange types over in the corner muttering about “Bondage and Deception” are what will cause most people alarm.

  • Rupert in Springfield

    Well, the good news is that Obama finally came out of the lock box and actually had something to say on the economy. Gee, guess what, he wants to go on a spending spree like Ted does. Suprise Suprise.

    What is with these clowns who think its a real great idea to go spending into oblivion while everyone else is tightening their belts?

    Hey, nitwits, figure it out, unemployment is back up to Clinton levels. The Dow has been cut in half. You just spent $1 Trillion on a bailout in DC that resulted in the stock market tanking. Now you want to sell bonds and raise taxes on everyone so you can spend it on your union thugs working on road crews? No thank you.

    • eagle eye

      If I didn’t know better, I’d guess from your post that you guys had just won the election. That the Dow had tanked under a Democratic administration. That the Republican administration had figured out what to do about the financial crisis and that it was on the road to being brought under control. That none of “the thugs” that have gotten us in this mess were in the financial and corporate headquarters.

      • Rupert in Springfield

        >If I didn’t know better, I’d guess from your post that you guys had just won the election.

        No, see, I point out that Obama is planning on doing the spending. He won the election so if I was portraying it as McCain won the election I would have said McCain was going to go on a spending spree. See the difference?

        >That the Dow had tanked under a Democratic administration.

        No, it has been going down for a while. However the record breaking tanking started after Obama won the election. This is to be expected, and was predicted by myself and others. If one of the few concrete things you run on is raising capitol gains and taxes on “the rich”, you have to expect a rapid sell off if you win. This would be especially true recently due to Clintons infamous retroactive tax increase. Elections have consequences and surely some part of the sell off is people who may have bought 10 years ago and thus still have some paper profit remaining and not wanting to see what little they do have taxed away by Barry O.

        Since Obama has not changed this position, which was ill advised when he touted it and would be insanity now, I see no reason not to hold him to the consequences of it.

        >That the Republican administration had figured out what to do about the financial crisis and that it was on the road to being brought under control.

        There has been no end of criticism of Bush over this as well as the bail out bill, and you know it. What is different is Republicans are more than able to criticize their own party. Democrats cant ever seem to.

        >That none of “the thugs” that have gotten us in this mess were in the financial and corporate headquarters.

        Gee, who ever claimed that? Funny, I’ve mentioned the corporate thugs plenty of times, especially the ludicrousness of them flying in on private jets to beg for money.

        So your position is if thugs in corporate headquarters got us into this mess then Ted and Obama are justified in paying off union thugs with road contracts? Somehow I don’t see how that follows, but ok.

        Anyway, if you guys would ever hold one of your own accountable, you would have a leg to stand on. How about it? Any criticism for Barney Frank? He certainly got us into this as much as any CEO. How about some criticism for Dodd? Mr. Number one Fmac and Fmae bribe money winner, with Obama right behind him. Any remarks?

        Oh well, how about some criticism for Obama? Gee, a one term senator somehow is getting almost as much bribe money as the head of the banking committee Dodd? Any criticism for him?

        How about the Big O not having word one to say since the election? And then the most poignant thing he has to say is we might lose a lot of jobs? Any criticism? He seemed to have all the answers a month ago and was more than happy to tell us about them every day. Now he is locked in a closet doing God knows what. Seriously, how much time does it take to pick out a bunch of Clinton retreads? Any criticism?

        No, I didn’t think so.

        You guys tend to be real good at dishing it out, but not taking it. The left didn’t give Bush a break from day one. Well, you won the election. So, get used to it, at least for the next four years.

        • eagle eye

          As it happens, I didn’t vote for Obama.

          As for the rest of your rant, I’ll simply point out one thing. You say “the record breaking tanking started after Obama won the election.”

          If you actually took the trouble to follow the markets, or even to look up what has actually happened, you’d see that between about Sept. 1 and October 27, the S&P500 dropped from about 1300 to about 850. There was a recovery to about 1000 right before the election (in anticipation of the McCain victory, right?). And a subsequent falloff to about 800. (I note that there was a surge Friday on the mere announcement of Obama’s likely choice for Secretary of Treasury.)

          Given the recent record of the likes of you in winning elections in Oregon and nationally, and given the record of the last President, maybe a little less talk about “clowns, nitwits, thugs” would be in order. Especially since this is what the electorate apparently has called for. You’ll have your chance again in a couple of years. If Obama and crew mess up, you’ll be back in the game. Otherwise, you’ll be toast. But even if you’re back in the game, the same old snarling, sneering talk that has gotten you in your present position will not work. Just ask Ron Saxton, Bill Sizemore, and the other locals. Oh, there is Kevin Mannix, he finally managed to win one this time (sort of). I always thought he was the best of the bunch.

        • dean

          Rupert…Eagle Eye is a Republican…hence “his side” is McCain and Bush’s not Obamas. So HE IS criticizing his own side here.

          I know you hate facts, but the economy under Clinton was about as good as it gets. When he left office we were in our 4th year of a budget surplus, poverty was at an all time low, and we were nearing the end of the longest continued economic expansion in American history. Economic growth had averaged 4% a year for 8 years, and this was AFTER he raised taxes at the upper end. And unlike Bush, income went up across the board. Median income went up over $6000 a household, while it DECLINED $2000 under Bush even BEFORE the meltdown. Inflation was at its lowest ebb since Kennedy, unemployment declined from 6.9% when he went in to just over 4% when he left. Bush has had about the opposite performance, which is why Clinton went out with 65% approval ratings and Bush is around 25%.

          I know…most of this is the fault of the left wing media. But still, facts are facts no matter who reports them.

          If you are going to blame Obama for the continued decline in the stock market since his election, yet 2 months before he cnan actually implement anything, then I’m sure you will be praising him up and down when the market has recoverd in time for his re-election right? And we can count on your vote?

          • eagle eye

            Right, I actually started coming here in the vain hope that somebody on the right in Oregon actually had some good ideas to “catalyze” things in our fairly run of the mill (politically, socially, and economically) state.

            I have to admit to a probably morbid fascination with the mutterers, snarlers, hissers and poppers that populate the rightwing opposition hereabouts. I wouldn’t have been too disappointed to find a colony of Neanderthals — though I had hoped for more — but I didn’t expect to find so many lizards and reptiles.

          • dean

            A last point on economics following politics. According to the Stock Trader’s Almanac a $10K investment made under all Democratic presidencies from 1901-2005 would have yielded a $279K return (48 years of Democratic presidents in that span.) The same $10K invested under the 56 years of Republican presidents would have yielded $78K. Adjusted for inflation you still come out ahead under Democras, $33K to $24K.

            Note that these numbers are from BEFORE the present tanking under Bush.

            In other words, cold hard facts show investors do better under Democrats than Republicans. Amazing isn’t it?

            So don’t fret Rupert. Obama and his team know what they are doing. Take that stash out from under your matress and invest it in alternative energy companies and you will earn more than enough to pay for your tax increase.

  • Bill Sizemore

    It is easy to point to times when a Republican was president and taxes were lowered substantially and thngs went well in the economy, i.e., the Reagan years. It is easy to point to times when things went well during a Democrat reign, i.e., the Clinton years.

    The real challenge is in proving that it was the policies of a particular president that caused the desired outcome. It can be proven with reasonable certainty that the Reagan tax cuts increased prosperity during the 80s and forward. It can even be proven that low income Americans as a whole did better during that period. A national study tracking tax returns during the Regan years showed that eight years after Reagan’s election the folks whose income put them in the bottom 20 percent in 1980 were pretty much evenly distributed across the income specturm eight years later.

    The rising tide lifted all boats, well those that could be lifted.

    On the other hand, it is hard to point to Clinton policies that resulted in the good times the nation enjoyed economically during his tenure. It is demonstrable that the recovery that we enjoyed under Bill Clinton actually began 14 months earlier during the first Bush’s administration, which does with any certainty prove that it was purely Bush’s policies that launched the recovery the Clinton adminstration enjoyed.

    Both Reagan and Clinton had to deal with opposition party control of all or part of Congress, the branch of government mostly responsible for spending, which partly explains the deficits during the Reagan years. Taxes were cut, tax revenues increased dramatically, but Congress increased spending to consume even more than came in.

    This is getting too long, so I will make my point. The recurring business cycle affects the economy more than presidents do. The effects of government policies are often long term enough that policies adopted by one congress and administration may not be felt or seen until another takes over. The new congress or adminstration may adopt bad policies while the nation is enjoying the benefits of previous policies or what is simply an upturn in the business cycle. Nonetheless, we give credit to the ones in power when the good times come, even though they may deserve none of the credit just as the next congress and adminstration may deserve none of the blame for the effects of policies they merely inherited.

    The bottom line is this: We give presidents too much credit. When it comes to the economy, Presidents are not that powerful, except when their party also controls Congress, in which case they can really screw things up.

    My prediction is that Obama and the Democrat controlled Congress will really screw things up. But no matter how bad things get, they will blame it on the mess the Bush adminstration left them and the media will cover for them.

    But on the other hand, the recurring business cycle may turn the other way and good old American entrepreneurism and optimism may save the day, in which case Obama will take all the credit and win again in 2012, even if his policies did not cause the turnaround.

    If we pull out of this tailspin, it more likely will be the result of the durable American spirit and the hard work and sweat of millions of risktaking small business men and women, not due to the policies of a bunch of politicians in Washington D.C. It took Republicans and Democrats messing things up in unison to get us into this mess, but they are not going to be the ones who get us out.

    • dean

      Funny…I thought it was private investors run amok that created the mess, and politicians who are trying desperate measures to bail us out.

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