Leader Blues

Wednesday, December 14, 2005

EDITORIAL >> Vote no Tuesday on more debt

Forget about all the legal questions surrounding the two bond proposals that will appear on the ballot Tuesday and consider only the sheer wisdom of the propositions, or the lack of it.

Sure, there are mind-boggling legal questions about both the interstate highway bond issue and the higher education bonds. The highway bond law that authorized this election seeks in the distant future to bypass the constitutional prohibition against state borrowing without first having a popular vote, and the higher education proposal seems to do the same, although the authors and sponsors of it have been equivocal on whether that was a purpose.

There are other legal riddles, but voters need not concern themselves with those, even though opponents urge you to. Defeat or passage of the propositions Tuesday will not affect those questions. They are part of the statutes passed by the legislature this year and those questions will remain after the election because Gov. Huckabee and his successor can call special elections on these questions until doomsday under the law. If the propositions pass, there will be lawsuits, perhaps friendly ones, to settle the questions before bonds can actually be sold. So they are almost immaterial to any voterís consideration.

No, evaluate them on two premises: Do you agree with the purposes of the money that they will cause to be spent and their priority ó repair of interstate mileage starting five to seven years from now and construction of new buildings on college campuses and tying all the Arkansas campuses to an interstate research network?

Second, is more or less permanent state indebtedness the best way to pay for the improvements?
You have to ignore the pitches of Gov. Huckabee and the other proponents of both issues. Like most campaign pitches, they are simple, appealing and wrong.

Paying for highway improvements as you go just does not work, said Gov. Huckabee, who 10 years ago said it did work and that bonded debt was wrong. (That was when Gov. Jim Guy Tucker was proposing highway bonds.) If you remember what the interstate highways were like six or seven years ago, the governor says, you know that paying as you go does not work. If you like all the improvements the past six years he says, you will vote to authorize the Highway Commission to do it again, and again, whenever it wants.

That assumes that nothing happened except the issuance of $575 million of highway bonds in 2000 and 2001. But that is wrong. When the legislature authorized the bond election in 1999, it also raised taxes, three cents a gallon on gasoline and four cents a gallon on diesel. Those taxes gave a big boost to highway building and would have done that even without bonds.

The gasoline taxes went largely to non-interstate construction but they freed money for the interstates, too. All the diesel taxes were dedicated to the interstates. They were obligated to pay off the bonds, but they could just as easily have been dedicated to an ongoing maintenance program. And the Federal Highway Administration pumped hundreds of millions more into interstate maintenance because the interstates were in bad shape everywhere, not just in Arkansas.

Without the highway bonds, there would have been a huge interstate highway program the past six years. In fact, there already was. It already had been under way a couple of years before the bonds were issued in 2000 and it seemed that those pesky orange barrels were everywhere.
Here is what the highway bond proposal is all about: With or without bonds, the diesel tax and the federal interstate aid will be used every year to repair interstates. If the bond proposal passes, from now on about one third of the road-use taxes dedicated to interstates both from Washing-ton and Little Rock will go to investors for their interest on the bonds. Without the bonds, that money would be spent on the highways.
You decide which is the wiser course.

In the case of the college bonds, the proposal contemplates two or more bond issues ó one to raise the money to pay investors in one lump sum the $100 million that they would earn from now until 2017 on the current college bonds and then another issue of $150 million or more to get the cash for new buildings and equipment on the campuses ó a nice little pot for every one of them.

Gov. Huckabee and his higher education chief say that enrollments have risen rapidly the past decade or so and that building on the campuses have not kept pace.

The implication is that there arenít enough classrooms for the youngsters anymore. But a check with state treasury report shows that the state has spent nearly $1 billion on buildings and capital equipment in the 10 years ending in 2004. Private fortunes spent another $250 million or so on university buildings. It has been the biggest building boom in the stateís history. Visit your favorite school and see the transformation.
If the college bond issues are approved, the governor says he will call a special session the week before Christmas to appropriate the $150 million for the campuses. But he could save the state millions of dollars if instead he simply asked the legislature to appropriate $150 million of surplus state funds for the buildings, if they are urgent. They could be built instantly and the taxpayers could be spared tens of millions of dollars of interest and 20 years of debt.

Again, your choice.