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s a candidate in the 2012 general election, for a
seat on the Grundy County Board, I and all other county candidates were asked
to answer a series of questions compiled by the local newspaper, The Morris
Daily Herald. The Herald has set up an Election Central website which
will contain a short bio of each candidate and their answers to the questions.
Currently this site is not live for the public, however the answers are now
posted for at least half the candidates and other candidates can view the
information. I will update this blog with an attached link once the site goes
live.
After previewing each candidate’s answers to the
six questions one recurring theme from my opponents deals with county spending.
Here are a few quotes from various candidates:
"Overall,
I oppose the county’s recent issuance of upwards of $20 million in new debt
(with interest) to construct a series of government buildings in the county.
Specifically, I oppose the Public Building Commission’s (PBC) purchase — with
the Grundy County Board’s blessing and your tax dollars — of the old Sav-A-Lot
property in downtown Morris." -
Curt Mercandante (R), District 1 Candidate
"Contractor’s
statements or bids in regard to county improvements need to be available to the
public. After thorough examination and approval, the projects need to be
completed within the budgeted amount. An example of our inability to do this is
our recent 911 center. It was originally budgeted as a 2.5 million dollar
project. It then grew to 8 million, which will eventually cost the taxpayers in
Grundy County over 21 million after interest and bonds." - Vicki Geiger
(R), District 1 Candidate
"Unemployment
is a huge concern in our area. The loss of many jobs, which can eventually
cause the loss of homes, has affected all of us in Grundy County. When a home
is foreclosed and sold, it reduces the value of all of our properties.
Responsible county spending and reasonable real estate taxes may have saved
some homeowners from this loss." - Vicki Geiger (R), District 1
Candidate
"I
disagree with continued irresponsible spending. *Millions over budget on the
911 center." - Vicki Geiger (R), District 1 Candidate
The county
board has been spending on building projects while the rest of us tighten our
belts. I oppose the most recent purchase of the old Sav-A-Lot property in
Morris. It is a prime piece of property close to route 47 that will now be
taken off the tax rolls. More money will be required to develop it. I also
opposed the building of the new 911 center that will cost more than $20 Million
dollars of taxpayer money to pay off the bonds created to finance it. - Teryl
Lundeen (R), District 2 Candidate
Over the course of the past 18 months my
opponents have inflated the true cost of the 9-1-1 center from $2.5 million to
now $20 million. They call these government buildings "wasteful". But
let's cut through the "small government at all costs" political
posturing and look at the true substance of the bond issuance, overall costs of
the government buildings, and cost impact to the average Grundy County citizen.
I'm a CPA, auditor, and forensic accountant, so I
like numbers. Numbers have a way of telling a story in a very objective manner.
They are what they are. Numbers don't have an agenda, and they don't have
political aspirations. However, as the old saying goes, figures don't lie but
liars can figure. But I am also a firm believer in the scientific method. My
career calls for objective analysis of evidence, even if that evidence may have
a negative impact on the future of my employer. I go where the numbers lead.
Twisting the numbers for personal gain isn't in my nature. Better the hard
truth than a fantasy, no matter how rewarding or comforting. That said; let's
begin by reviewing the various county bond issuances’ so strongly opposed by my
republican opponents.
In late 2007 the Grundy County Highway Department
maintenance garage burned to the ground in a massive fire, which was fought by
over 200 fire fighters in sub-zero temperatures. The fire wiped out the
county's entire snow removal fleet, causing over $2 million in damages. The
building also housed county Highway Department offices. Roughly a year after
the fire there was a series of existing bonds, floated by the county in 2000
that were about to be rolled off. A decision was made by the county to rebuild
the Highway Department building along with other projects and instead of
dipping into savings (County accountants wanted the county to maintain 6%
savings), a further decision was made to instead maintain the county levy (the
portion of home owners tax payments impacted by just the county portion, NOT
school board) at the same level it was at prior to the 2000 bond series
expiring and rolling off. Thus, a new bond series was issued in 2008 for $10
million over 20 years. And an additional 2010 series for $2.6 million for 20
years under the federal stimulus bill in which 45% of the interest is
reimbursed every year by the federal government. More on the hard numbers
later.
With the Highway Department burned down, the 2000
bonds rolling off, and exceptional municipal bond rates, the decision to issue
these bonds was a bipartisan decision and reflected leadership with the type of
foresight any private company would love to have. According to the Board of
Governors of the Federal Reserve System, the municipal bond index average in
2008 was 4.8 percent with a high of 6 percent. This low bond rate atmosphere
makes local infrastructure expansion easier on the tax payers, and fiscally
responsible.
This argument that the county government should
act like a household and tighten their belts at the same time households are
tightening theirs in some sort of sympathetic gesture, is myopic and displays a
naiveté of government responsibilities to the public welfare. Borrowing and
expanding today, with low municipal bond rates, is cheaper than spending down
the road. As JFK used to say, "The time to fix the roof is while the sun
is shining." As an example of why government doesn't act like a household
consider your own situation. If you have children you'll eventually come to
retirement, the children will have grown and moved out, and you will have your
home paid off. Hopefully. If someone offered you a new home at 4% interest you
probably wouldn't jump at it, as your kids are gone and you don't need the
expansion. The government doesn't exist in this dynamic. It must provide
services for thousands of people into perpetuity. Buildings such as the 9-1-1
center and court house will need repair and renewal continuously in order to
carry out its constitutional duty of providing for the public welfare. So while
government should be responsible, and spend on those items that provide a
positive return on investment, let's dispel with the myth that it must act in
that same manner as a household.
So besides the Highway Department building, what
are the "other projects" mentioned above? First was the Animal
Control building which was a literal health hazard. Second, the courthouse
needed extensive rehab work which included asbestos abatement, providing hot
water to the second floor, bathrooms that were handicapped accessible (required
by law), new judge chambers (due to a new judge coming on board), law
libraries, and all the wiring and piping connected with such work. Third, the
9-1-1 dispatch center. Why was a new dispatch center needed? Because the 9-1-1
equipment was housed in a closet, with no ventilation, and the inherent risk of
a dropped emergency call was more than an acceptable level. This is the one
project I truly do not understand the outrage, especially when you drill down
and realize how much this center costs each home owner per month. It equates to
27 cents a month of your tax bill. Let me repeat that. 27 cents a month. Are my
opponents honestly saying that the improved emergency response times, cost
savings to the municipalities within Grundy County, and a service that could
save the life of your child, mother, father etc. is wasteful? Just how much is
a life worth? I'll break down how I arrived at 27 cents a month further on.
So how much was the 9-1-1 center really? I think
the confusion comes in through not understanding how bond interest and
amortization works. It's either that, or Republicans are purposely misleading
people. One speaks to competence, the other to integrity. But I digress. The
initial allocation was for $2 million, but estimates were around $4 million
which included future expansion of booths. Republicans argued that a new
building wasn't needed, or that the new facilities should be located at the old
City Hall. However, that building cost $600,000 and required $3 million in work
to bring it up to minimum code. Plus, it was not expandable for future county
growth. More would have to be spent over the long haul. The goal of the final
site was future expansion, such as a satellite health department. So, the 9-1-1
center ended up costing approximately $4.6 million dollars. Now, with interest
on the bonds over the course of 20 years, which is where the $4.6 million came
from, that total rises to roughly $7.9 million. But of course, when someone
asks you how much you paid for your new car do you tell them the sticker MSRP
price, or the final amount of your 4 or 5 year payments with interest?
And what about the claim by Vicki Geiger that the
9-1-1 project was "over budget"? Pure fiction. The BID amount
was $4,727,465 and the final DRAW (the amount actually paid) was $4,607,477.75.
Then add in the fact that roughly $200,000 in spending came from a federal
grant. This means the 9-1-1 center was NOT over budget. In fact it was
$119,987.25 UNDER budget. Nobody in any industry includes interest on that $4
million-plus as part of the cost budget.
So where do county candidates like Curt
Mercandante, Vicki Geiger, or Teryl Lundeen get this $20 million figure (Well,
actually Vicki Geiger says $21 million, but what's $1 million between friends)?
That is the total cost after 20 years of the entire bond issuance consisting of
principal of $10 million (issued in 2008) and $2.6 million (issued in 2010)
plus the amortized interest over 20 years. That total actually totals
$20,689,557.
So how do all those building projects
impact and the related $20,689,557 over 20 years affect the property tax bill
for you the tax payer? Okay time for more numbers. If you have a low tolerance
for math and your eyes have already glazed over, please stay with me through
this next analysis. The final numbers really call into question the complaints,
and also bring to light the foresight of leadership on the board in 2008.
Currently, every year approximately $550 of the
average property tax bill in Grundy County goes toward the County levy (i.e.
all the services you receive from the county aside from the schools. Such as
the court system, roads, police protection, health, emergency services, etc.)
Last year the total principal and interest paid on the total bond
issuance came to approximately $700,000. The county has a full budget of
approximately $33,000,000, which means the bond repayment is equal to roughly 2
percent of the full county budget ($700,000 divided by $33,000,000). Now,
multiply the $550 noted above by the portion allocated to bonds ($550 * 2
percent). This equals roughly $11 for a full
year. Or, 91 cents a month. If we apply that same math to just the 9-1-1
center, which as I stated before costs a total of $7.9 million, it equals $3.3
per year, or 27 cents a month. You can't get a cup of coffee for 27
cents. It costs each tax payer 27 cents a month for a state-of-the-art
emergency communication service that could ultimately save the life of a loved
one. The republicans view that as wasteful and have vowed to make sure none of
that happens again. Keep that in mind as you go to the polls this November
6th.
To be fair, and honest with my calculations, the
bond servicing is weighted heavier in later years, anticipating zero economic
growth in the very early years. This is much like the mortgage on your house where your initial years
are mostly interest and the principal rolls off in larger amounts as time moves
forward. The approximate $700,000 servicing this past year becomes
approximately $1 million by 2018. And as the yearly servicing gradually rise,
the final payment in 2030 equals $1,384,684. That final payment represents
roughly $1.90 per month on your tax bill, but that assumes all variables remain
constant over the next 20 years. It can be safely assumed that won't be the case
and the $1.90 figure will most likely drop accordingly.
Something to also keep in mind, the 9-1-1
center's size and capabilities is also turning into a revenue generator.
Various entities are looking at utilizing the facility, such as Seneca Fire,
Police and Emergency Services, and Braidwood Police. While still in the works,
these deals will provide entry fees of approximately $200,000 with no new
personnel needed. Also, with the State Police possibly reducing from 21 districts to 7 and revamping communications,
our facility could be utilized by them with rental fees to the county. We shall
see.
So given the overall impact on each tax payers
annual bill, one can easily see that Vicki Geiger's statement that "Responsible
county spending and reasonable real estate taxes may have saved some homeowners
from this loss." is completely misplaced, to be kind. This is nothing
but fear mongering, or a total lack of understanding of the facts. Either way,
do you want individuals on the county board who can't grasp facts, or purposely
mislead for political gain? Or more importantly view 27 cents a month to
provide for your basic safety and welfare as wasteful? I think the answer is
clear.
An additional complaint from Mr. Mercandante was
the Public Building Commission's purchase of the Sav-A-Lot property in downtown
Morris, approved by the County Board. Again, this is a complaint from a myopic
viewpoint. The owners of the Sav-A-Lot property were in foreclosure (not taken
off the rolls, as Teryl Lundeen the republican candidate from district 2
proclaims) and the county was able to purchase the property for $500,000. The
PBC and County Board saw an opportunity to purchase a site for future needed
expansion at a very low price, rather than waiting until the expansion was
actually needed and the price was double. Short-term the property is being used
for additional downtown parking, which local business owners appreciate. Future
use, while not set in stone, may be used for a Law and Justice Center. Any
intellectually honest individual would acknowledge that everything is a crisis
in government because nobody looks forward. Our leadership on the County Board
ensured that wasn't going to be the case.
In summary, it is important to keep certain things in the forefront when you hear republicans in Grundy County grumble about what a terrible waste of money the 9-1-1 center was, or how the board should have been tightening their belts. The 9-1-1 center came in $119,000 under budget, on bonds with very low interest rates, the bonds didn't raise the county tax levy, and the center only costs you 27 cents a month for state-of-the-art emergency response. That's the kind of leadership Grundy County voters should be demanding from every politician. Election Day is less than a month away. Let's send
knowledgeable, honest brokers to the county board.
