FCTA Opposes the Fairfax County FY2020 Bond Referenda
-- 09/07/2020, by FCTA president Arthur Purves.
Fairfax County has four bond referendums on Nov. 3, 2020, general election ballot, and voters may vote yes or no on each of these referenda:
- Community and Health and Human Services - $79 million
- Libraries - $90 million
- Parks - $112 million
- Transportation - $160 million
FCTA opposes these bond sales. Here's why:
This year the county will spend $350M on debt service but raise only $220M (estimated) from bond sales. This happens most years. If the county hadn't resorted to bonds, the county could have spent $220M on capital maintenance and not have to pay any debt service, thereby saving around $150M annually.
In its annual budget documents, the county does not publish the interest rates nor the bond ratings for bonds it has sold. Why?
For controversial projects, the county bypasses bond referenda by having the Economic Development Authority (EDA) sell bonds as "lease revenue" bonds. In theory, lease revenue bonds are paid for by fees, such as golf fees or recreation center fees. In reality most lease revenue bonds are paid from county tax revenues. One example is the school system's controversial $60 million Gatehouse Administration Building, which was not put on a bond referendum but was funded by EDA "lease revenue" bonds. Other examples are were the controversial Pennino and Herrity buildings and, the South County High School. Lease revenue bonds have a higher interest rate, but we don't know how much higher because the county does not publish interest rates.
The county has $3 billion in bond debt, which is the maximum debt it can carry and still maintain a AAA bond rating. If a hurricane or some other catastrophe occurred and it were necessary to borrow for major repairs, the county would have a lower bond rating and higher interest rates.
There is no process to prevent gold-plated renovations and new construction.
The transportation bond is for the Washington Metropolitan Area Transit Authority (WMATA). While Metrorail maintenance was neglected for decades, WMATA budgets are not transparent. For example, are WMATA employees receiving full pay while not working during the COVID lockdown? How much of the CARES COVID relief funding is being used to pay full salaries for non-working employees? WMATA does not publish in its annual budget salary scales, annual raise history, and pension and health benefits. Annual fares should increase at the same rate as employee raises and benefits increase and not be offloaded to the taxpayer.
In short, we the taxpayers cannot afford these new bonds!