Leader Blues

Wednesday, November 16, 2005

EDITORIAL >> Bond idea still dubious

Here is the key question that everyone should be asking about the big interstate highway bond issue that will be on the ballot at a special election on Dec. 13: Why are we paying for a special election in the Christmas season rather than, say, the regular general election of 2006, or 2008 or even 2010?

No one apparently thought to ask that question this spring when the legislature, virtually without debate, approved the legislation authorizing Gov. Huckabee to call the election, and no one wants to talk about it now, four weeks before the election.

What is the emergency that moves the governor to ask us to act now to empower the Highway Commission to obligate the state for another $575 million of debt to repair stretches of the interstate system? Huckabee himself says the interstate system now is in excellent shape.

Are we having to act quickly so that taxpayers can take advantage of relatively low long-term interest rates, still in the neighborhood of 4-5 percent on municipal bonds of medium maturity?

Well, no. The Highway Commission said this week that if the voters grant them permanent authority to issue bonds whenever the commission wishes, it will not do it before 2010, perhaps much later than that. 2010! And we are voting five years in advance.

That really is no surprise. The commission can’t issue bonds until it has nearly paid off the current $575 million bond issue, authorized six years ago. Some $500 million of that is still outstanding and that the $75 million a year of diesel taxes and federal interstate matching funds that would support the new bonds are obligated to pay for the old ones.

We repeat: Why are we voting at a costly special election in an off-year when nothing will happen for five to eight years?
Until Gov. Huckabee and the Highway Commission answer, let us assay a few guesses.

The voter turnout at special elections in the chilly season will be a small fraction of the turnout at a general election. The voters will be those with a special interest in the outcome — builders and suppliers, naturally, but in the broadest sense the urban interests that are clients of the interstates. People out in the state will not even note the election’s passing unless they are aroused that their interests might be harmed. The 1999 bonds were approved overwhelmingly at just such an election, which favors those proposing the issue.
If you wait until 2010 to put the question before the voters, conditions might not be conducive for a favorable vote. As Alan Greenspan implied this week, the nation’s gigantic budget deficits and the mushroom trade deficit may drive up interest rates to stratospheric levels. The Highway Commission could not calculate a fairly low payout of interest over 12 years, as it did this week by basing it on current interest rates. In 2010 or 2012 the state may have have other large debt obligations — for school buildings, for instance — and voters would have a horror of even greater debts obligating the state’s general funds. Yes, Gov. Huckabee’s highway bond proposition would obligate tax receipts that ordinarily would go to the schools if the diesel tax or slumping federal matching funds are ever short of paying the highway bond investors.

This way, the Highway Commission and the bond underwriters and lawyers could plunge ahead with the bond sale regardless of public skepticism.

Cynics — not us — would suggest that if the vote were in 2010 or 2012 Mike Huckabee could not claim credit for the great leap forward.
Some lawmakers, like the Arkansas Trucking Asso-ciation, were saying this week that they had not been aware when the legislation passed that it would permanently bypass people’s constitutional right to vote every time the state incurred a big debt that obligated their taxes. Some did not know that it could tie up general revenues as well.
Too many questions. Few of them asked. None of them answered.