McConnors corner
Nothing Is Free
By Sean McConnor
Aug 10, 2008 - 10:59:08 AM

It sounds so simple. You vote for a bond measure. You don't have to pay taxes and you get a new school or park.  Wrong, nothing is free.

What was it that the late comedian said? "A sucker is born every second?" Or was it the circus man P.T. Barnum? No matter who said what, the politicians are playing us for just that with the countless bond measures that will appear on the November ballot.

The Los Angeles Community College District (LACCD) and the L.A. Unified School District (LAUSD) will have billion dollar measures on the ballot along with some state bond measures, too  Allegedly, these measures will provide monies for much needed or delayed construction projects to help educate our children. Maybe and maybe not, but we will review this later.

Meanwhile, what are these bonds? How do they operate? Well, they are bonds sold by the various municipal governments. In exchange for your buying a bond, which costs in the thousands, the local government will pay you back with a good rate of interest for 30 or 40 years with the interest tax free. They are safe as anything can be. What better deal can you get than this?

Of course, there is a lot of game playing going on with the bond market like everything else. The bond agencies who rate bonds have been downgrading the ratings of municipal or local bonds. As a result, the cities have had to pay for insurance to get better ratings. The taxpayers pay for this because the cities offer higher interest to sell their bonds and pay for insurance.

Many bond buyers don't want to buy local bonds since Orange County had some financial problems in 1994. This is ridiculous because local governments rarely go belly-up and many of their budgets require that they pay for their obligations (bonds, debts, etc) before they can spend a dime on police or fire. The bond rating companies make a killing, the buyers get tax-free income, and the voters get much needed services. Not so fast.

The property tax owners are footed with a few hundred dollars more taxes each year every time a bond measure is passed. The cities and agencies don't care because the construction companies and buyers of the bonds contribute to campaigns of politicians who keep the gravy flowing. Everyone gains in the end except us, the taxpayers.

You won't find me voting yes in November, not when the LAUSD has such a high drop-out rate and lower test scores or when the LACCD has one of its decertified. I am not going to reward incompetence. No, I don't mean the kids. I mean the leaders of our education system.



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