Ken Larsen's web site - March 7, 2017 DOLRT speech to BOCC by Del Snow
Too often, the process for making good decisions has to boil down to money. Wish lists created with the best of intentions still have to be funded. I know that all of you, as elected representatives, are dedicated to protecting the fiscal health of Orange County and you’ve doubtlessly spent sleepless nights going through the Go Triangle Financial Plan, highlighting questions that need to be answered.
These are the questions that occurred to me:
In the event that there are cost over-runs, unforeseen expenses, or revenue shortfalls, Go Triangle can issue bonds and notes and/or levy a tax via the Special Tax Board.
If the Special Tax Board, made up of representatives of the 3 Counties, authorizes the debt, WHO will be responsible for repayment of bonds?
If the County is responsible for them, what will be the effect on the county’s debt service and/or debt capacity?
Is there any limit to the amount of credit that’s available? At some point, will the Local Government Commission require the counties to raise taxes to cover the notes?
And, please note that the FTA is also asking questions about the bonds and financing.
The Go Triangle plan presumes sales tax revenue growing EVERY year by 4%. Numbers are funny – “4” doesn’t sound like a big number. But, if you extrapolate that number out, after 10 years, sales in Orange County would have to increase by over $560 million dollars to yield the projected 4% year over year revenues. Consider that 4% is considerably higher than the Congressional Budget Office’s projections, and that to date, the longest period of economic growth in US history has been 10 years, according to the National Bureau of Economic Research.
This plan assumes 45 years of consistent growth.
My follow-up questions are,
Do you believe this to be a realistic assumption?
Where in Orange County do you see this happening within the next 10 years when the funds will be needed?
Given that that retail stores are cutting back on locations, which will affect sales tax revenues,
What guaranteed contingency plans are in place now?
I’m sure you agree that shortfalls and/or overruns will not happen this year or next year because we’re still planning. The challenge appears when construction starts, problems arise, and revenues don’t come in as expected. Then, the Special Tax Board, not GoTriangle, will have to figure out how to make up the shortfalls. But by then, your options will be limited.
When Orange County voters voted for a half cent for TRANSIT, you signed a contract with GoTriangle on our behalf. Circumstances have undeniably changed. We are relying on your judgment and objectivity to protect our interests now and in the future.
|Ken Larsen's home page|