(Jim Clark) – Merry Christmas, Washoe County taxpayers. By a 3-to-2 majority, the county commission has saddled all of us with a $2.1 billion dollar albatross called a “bond bank” that can cause haunting nightmares in the future.
What exactly happened and why? Last May the county manager and chief financial officer recommended proposed language for an ordinance that would authorize Washoe County to issue general obligation bonds for up to 15% of total county assessed value or about $2.1 billion (county assessed value is currently $14 billion) and invest the proceeds in bonds to be issued by municipalities located wholly or partially within Washoe County. The alleged purpose of the proposal was to allow Washoe County to only charge them the county’s low interest rates due to its AA rating. At that hearing commissioners Weber and Jung objected to the huge total and others warned that proceeds could be used to buy Reno junk bonds.
In November, the ordinance, amended to authorize purchase of only bonds issued by water authorities. Washoe County needed $26.1 million bonding approval to sell its water department to Truckee Meadows Water Authority. The ordinance had its first reading and passed by a 3-2 vote (Weber & Jung again voting no). A second and final reading was set for December 13. Former commissioner Jim Galloway did a yeoman’s job of organizing an impressive group to speak against the measure.
In addition to Galloway himself two professors of economics from UNR, a well-respected private economist, former corporate chief financial officers and bond dealers, all in all 22 speakers, warned commissioners of the risks and pointed out that the “savings” of $3.9 million over 20 years worked out to $0.02 per day for the 18,000 ratepayers who would benefit from this. Opponents also pointed out that the $2.1 billion proposed was almost 1,000 times the amount actually needed to fund $26.1 million. I read a letter into the record from Incline Tax Revolt President Maryanne Ingemanson which pointed out that the $43 million judgment the county suffered in July for taxes unconstitutionally collected from Incline parcel owners was only for 2006 taxes and that suits for other years were nearing final judgment which could cost the county substantially more.
Despite the overwhelming testimony in opposition to the proposal and despite the vehement opposition of Commissioners Weber and Jung a majority consisting of Commissioners Breternitz, Humke and Larkin voted the measure into law. Immediately after the vote Humke instructed staff to draw up an amendment that would require a supermajority of commissioners to approve bond issuances under the ordinance and Larkin asked staff for language that would lower the $2.1 billion authorized. At the conclusion of the matter Larkin remarked on the record that “the $3.9 million in savings over 20 years doesn’t mean much to Incline but its real money to these ratepayers.” Since I was the only speaker from Incline I assume the remark was aimed at my testimony.
The following Saturday Commissioner Breternitz announced that he is not running for reelection. Commissioner Larkin has stated he will announce his intentions in January and Commissioner Humke will be termed out in 2014 so it’s possible that all three of the tin-eared commissioners who voted this thing in won’t be around to survey the wreckage.
Will the amendments help? As former Commissioner Galloway stated: “The proposed amendments will make the ordinance less bad, but it will never be a good ordinance because it is bad policy and sets a dangerous precedent.
All this to subsidize 18,000 Reno water users for $0.02 per day.
(Jim Clark is President of Republican Advocates and a member of the Washoe County & Nevada State GOP Central Committees. He can be reached at email@example.com)