Thursday, January 13, 2011

Three Anchorage School Bonds Worth $71 Million To Be Considered For 2011 Municipal Election By Anchorage Assembly On January 18th

Update February 2nd: Links to the bonds have now been updated and are corrected.

During its January 18th meeting, the Anchorage Municipal Assembly is slated to introduce three proposed school bonds worth just under $71 million submitted by the Anchorage School District. The objective is to place the bonds on the ballot for the April 5th, 2011 Municipal Election. You can read the full agenda for the meeting HERE. Public testimony and final action on the bonds will not take place until the February 1st Assembly meeting. Update February 2nd: The three bonds were approved for inclusion on the ballot.

The Anchorage School District reminds the community that while we're being asked to vote to take on this debt, ASD has retired $148 million in bond debt since the last school bonds were approved in April 2008.

Because the bonds have not been formally approved yet, they have no official designation. For this post, they will be generically referred to as Proposition 1, Proposition 2, and Proposition 3. The highlighted links take you directly to the documentation.

Proposition 1: This is the Service High School bond.

-- Abbreviated Description: Shall Anchorage borrow up to $37,132,000 through the issuance of general obligation bonds to pay for a portion of the costs of additions to and renewals of Service High School and other educational capital improvements? The Project currently qualifies for a state grant of $21,000,000 based on $9,132,000 of the issuance and also 60% State debt reimbursement on $28,000,000 of the issuance (subject to annual legislative appropriation).

-- Impact Upon Property Taxes: If the State chooses to make full reimbursement, the annual increase in taxes would be $5.19 to retire the proposed bonds (based on $100,000 of 2011 real and personal property value). Without State reimbursement for debt service, voter approval of this bond proposition authorizes for each $100,000 of assessed real and personal property value (based on the estimated 2011 assessed valuation) an annual increase in taxes of approximately $9.47 to retire the proposed bonds.

-- Justification: Read the one-page summary of economic effects HERE and the seven-page justification memo HERE.

-- Prognosis: This could be a tough sell. This is the one school bond most likely to be rejected by voters because of cost and relevancy issues. I've not made up my own mind on this bond.

Proposition 2: Educational Capital Improvements And Facility Building Life Extension And Design Projects. This includes design projects for the future renovation of Girdwood K-8 and Airport Heights, Gladys Wood and Inlet View Elementary Schools, as well as the design of career, technical and vocational education improvements for the West/Romig campus.

-- Abbreviated Description: Shall Anchorage borrow up to $16,865,000 through the issuance of general obligation bonds to pay for educational facility building life extension and design projects and other educational capital improvements within Anchorage? The Projects currently qualify for 70% State debt reimbursement on $11,765,000 of the issuance and 60% State debt reimbursement on $5,100,000 of the issuance (subject to annual legislative appropriation).

-- Impact Upon Property Taxes: If the State chooses to make full reimbursement, the annual increase in taxes would be $1.42 to retire the proposed bonds (based on $100,000 of 2011 real and personal property value). Without State reimbursement for debt service, voter approval of this bond proposition authorizes for each $100,000 of assessed real and personal property value (based on the estimated 2011 assessed valuation) an annual increase in taxes of approximately $4.30 to retire the proposed bonds.

-- Justification: Read the one-page summary of economic effects HERE and the seven-page justification memo HERE.

-- Prognosis: This bond is more promising based upon the inclusion of a vo-tech upgrade for the West/Romig campus. I'm leaning in favor of it.

Proposition 3: Career, Technical, And Vocational Facility Education Upgrades Project Bonds. The proceeds will be used to pay costs of upgrades at career, technical and vocational facilities at seven high schools, five middle schools and the King Career Center.

-- Abbreviated Description: Shall Anchorage borrow up to $17,000,000 through the issuance of general obligation bonds to pay for career, technical and vocational facility education upgrades within Anchorage? The Projects currently qualify for 60% State debt reimbursement (subject to annual legislative appropriation).

-- Impact Upon Property Taxes: If the State chooses to make full reimbursement, the annual increase in taxes would be $1.74 to retire the proposed bonds (based on $100,000 of 2011 real and personal property value). Without State reimbursement for debt service, voter approval of this bond proposition authorizes for each $100,000 of assessed real and personal property value (based on the estimated 2011 assessed valuation) an annual increase in taxes of approximately $4.34 to retire the proposed bonds.

-- Justification: Read the one-page summary of economic effects HERE and the seven-page justification memo HERE.

-- Prognosis: This is the most promising of the bonds. Many people have called for an increase in vo-tech education to provide more qualified blue-collar workers for the economy. This will reduce the demand for immigrant labor and create more jobs for Americans. These upgrades will facilitate the ability of ASD to meet this demand; it is critical that we strengthen the blue-collar sector of our economy to promote greater economic diversification and autarky. If you only vote for one school bond this election cycle, vote for THIS ONE.

The Anchorage School District provides more background on the formulation of these bonds in this memo.

15 comments:

  1. Alaska Has At Least $7.76 Billion In Surpluses of the Taxpayers Money it is not using.

    FY 2003 Report Home Page Flags courtesy of Robesus Inc.

    Introduction

    The State of Alaska at the State-level has approximately $7.76 billion of the taxpayer's money it is not using, i. e. surpluses equal to $11,888 for every man, woman and child in Alaska or $47,552 for a family of 4. This does not include all the additional surpluses that exist in the school districts, cities, or counties in Alaska.

    These surpluses do not include the Alaska Permanent Fund which has a total fund balance of $24.2 billion.

    Go on CAFMAN.COM (people, they are lying to you.)

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  2. What are these surpluses we refer to?

    Government surpluses, as used in this report, are funds that are not required or needed for the operation of all government operations, funds, accounts, agencies, etc., directly or indirectly, for the year(s) covered by the budget which is usually one year. Theoretically, at the end of every fiscal year, governments should have little or no cash/investments on hand. But what we have found is that most governments have huge amounts of cash and investments on hand at the end of the fiscal year. And somehow these cash and investments are not being recycled back through the budget process the next year, but are being held year-after-year.

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  3. Running Surpluses is Stealing

    Although taxation is legitimate, running a government surplus isn't. It represents a taking by the state, because it exceeds the government's contract with the community. It is no different than if a federal agency were to take a person's land or possessions without just compensation (an activity barred by the Fifth Amendment). Excess taxation isn't what the people bargained for.

    In presuming entitlement or authority not ceded by the community, the state abrogates its moral pact with those it governs. Its power is no longer derived from the people, whose rights to liberty and property it boldly denies.

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  4. The Governor and the Legislators

    The Governor and the legislators should include in the next year's budget the previous years revenues not spent as indicated by the CAFR. These were once a revenue and should still be considered revenue for budgetary purposes.

    Also, they should consider a zero-balance budget concept for all budget and non-budgetary items in the CAFR including the College and Universities and the Component Units.

    Budgeted expenditures (for the budget) should be last year's expenditures (from the CAFR) adjusted for demonstrated requirement changes in project, program or services. An increase in requirements should include the costs of these additional requirements. Conversely, a decrease in requirements should result in a decrease in costs associated with the decreased requirements.

    The Governor and legislators should take into consideration the entire financial condition/status of the State in the budgetary process by including all of the funds in the CAFR as being a part of the budget.

    This system is covered in the CAFR Budget System. This system needs to be implemented in all governments.

    If the State holds the excesses/surplus, it will earn 4% to 5% on that money. If the State returns the money to the people it will receive 20% in revenue because of the increased economic activity. This is elementary economics.


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  5. Laws need to be changed.

    Every thing done by governments is by law. There are laws that state this or that regarding the use of some of the funds. Man made the laws, man can change the laws. How much effort would it be to include at the end of every law "...or if considered excess or not needed for the current operation that the funds will be refunded to the taxpayers?" See how easy it is.

    At one time every law had its place, but things change. The laws need to be reviewed for change to meet the current needs of the government and the people to release these funds for use/refunded.

    If this were accomplished, the State would have a huge surplus to refund (rebate or tax reductions) to the taxpayers. Such a refund would create considerable wealth and jobs, increase wages, increase State and local government revenues, dramatically increase the economy, and create the greatest economic expansion in the history of the State. Everyone wins.

    If you want to know the financial condition of your government(s), do not look at the budget. Get the CAFR.


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  6. The Synergistic Magic of Economics.

    What happens when the government holds the $7.76 billion.

    (In Thousands) Investment Income Per Capita Family of 4
    The government holds and investments the surpluses at 4.5%. 349,155 535 2,140

    Here is what happens when the $7.76 billion is returned to the taxpayers (the private economy).

    (In Thousands) Surplus
    Effect Per Capita Family of 4
    The surplus is returned to the taxpayers. 7,759,006 11,888 47,552
    Wages are increased. 3,879,503 5,944 23,776
    State government revenues increase. 1,551,801 2,378 9,510
    Local government revenues increase. 1,241,441 1,902 7,608
    Federal government revenues increase. 3,103,602 4,755 19,021
    Total Benefits... 26,867 107,467

    In addition, 155,108 jobs are created. This is why it is disastrous for governments to hold excesses/reserves of the taxpayers money.

    Note: The economic impact analysis is further explained at Economic Impact Analysis.

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  7. The business community suffers the most.

    Before the 9-11 tragedy, President Bush and Congress provided tax rebates which averaged $427 for every American. This was to create an additional $60 billion in consumer (economic) spending, turn the economy around and create jobs for the unemployed. However, 9-11 change that.

    As the above economic impact chart shows, if the State returned the $7.76 billion in surpluses to the people the State economy would grow by $23,776 per capita. That is 56 times the amount the Federal government used to stimulate the U.S. economy. Businesses net incomes could double or triple. This is elementary economics.


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    Examples

    The International Airport, an Enterprise Fund, had net expenditures of $5 million. It also had reserves (cash and investments) of $331 million. That represents 67 years of reserves.

    The Alaska Industrial Development and Export Authority, a Component Unit, had net expenditures of $10 million. But it also had cash and investment reserves of $582 million. The reserves represent almost 61 years of net expenditures.

    Commercial Assistance, an Enterprise Fund, made a profit of $2.2 million . It had reserves of $47 million.

    Alaska Clean Water, an Enterprise Fund, made a profit of $2 million and had cash/investment reserves of $64 million. It only had expenditures of $386 thousand. The reserves represent 165 years of expenditures, not net expenditures.

    Governments should be non-profit organizations and use pay-as-you-go systems. Having 165 years of reserves is definitely not pay-as-you-go.

    These only represent four of the 52 funds shown below that had cash and investment reserves not being used.


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  8. What to do?

    Unless the budget flaws are corrected and the entire State finances are used in the budget process, the problems that created the surpluses will continue to exist. The budget deficits reported by the Governor and legislatures will be used year after year for the excuses for tax increases and/or to reduce needed services.

    Just stopping a tax increase or a reduction in services will not solve the problems. The problems will come back the next year.

    I have provided the details of the surpluses and explained the ways the surpluses are created. The data is accurate because it comes directly from the government's own financial statement, the CAFR. You must provide the where-with-all to convince the Governor and legislatures that the surpluses exist and what should be done about it. I live in Arizona. It is not my money that is at stake.


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  9. Exhibit A

    The 2003 CAFR is located at:

    http://fin.admin.state.ak.us/dof/financial_reports/cafr_toc.jsp

    Items not Included

    The following items are not included in the amount of surplus shown:

    -Buildings, roads, bridges, land (not for sale), and equipment.

    -Deferred compensation plans for employees. These are plans in which the employee contributes to his/her retirement over and above the normal employee retirement contribution.

    -Any fund that is 100% supported by donations, bequests, gifts, endowments, etc. These are not taxpayers money.

    -For Colleges and Universities. All endowment and similar-type funds should not be included as surpluses. Sometimes these funds are combined with other college/university funds. We are interested in surpluses, so in these cases the total amount should not be included.

    -Funds in which the revenues/contributions are 100% held for other individuals, organizations or another government.

    -Funds that are required by law in which a bank, financial institution, insurance companies, etc. are required to deposit with the government a certain amount for insurance against the entity going bankrupt. These are not taxpayers' money.

    -Retirement/Pension Funds - only included are 1/2 of the actuarially determined excesses, the taxpayers portion. The other 1/2 is the government employees portion.


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  10. WWW.CAFRMAN.COM

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  11. Review of The State of Alaska CAFR- FY 2003

    CAFR Page List of Investments By Fund (In Thousands) Potential Surpluses Notes
    Governmental Funds:
    General:
    108 Constitutional Budget Reserve Subfund 2,092,417
    108 General and all Other Subfunds 720,798
    Alaska Permanent Fund
    Special Revenue:
    120 Second Injury 3,048
    120 Fishermen's 11,637
    120 School 7,371
    120 Fish and Game 9,994
    120 National Petroleum Reserve 50,440
    121 Reclamation Bonding Pool 1,059
    121 Clean Air Protection 279
    121 Exxon Valdez Oil Spill Restoration 4,310
    121 Alyeska Settlement Trust 7,976
    121 Exxon Valdez Settlement Trust 6,503
    121 Northern Tobacco Securitization Corporation 401
    Debt Service:
    134 General Obligation Bond Redemption 39,211
    134 Northern Tobacco Securitization Corporation 28,786
    Capital Projects:
    138 Accelerated Alaska Transportation Projects 103,142
    138 Transportation Project 124,184
    138 Educational and Museum Facility Design, Construction, and Major Maintenance 231,837
    Permanent Fund
    138 Public School Trust Fund 268,361
    Proprietary Funds
    Enterprise:
    Commercial Assistance:
    146 World Ware II Veterans' Revolving Loan 222
    146 Small Business Revolving Loan 340
    146 Commercial Fishing Revolving Loan 26,179
    147 Child Care Facilities Loan 124
    147 Historical Districts Revolving Loan 137
    147 Fisheries Enhancement Revolving Loan 19,582
    147 Mining Revolving Loan 257
    Energy Assistance:
    152 Alternative Energy Revolving Loan 339
    152 Residential Energy Conservation 1
    Other Agencies:

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  12. Total Potential Surpluses… 7,759,006
    Per Capita… 11,888
    Family of 4… 47,552
    WWW.CAFRMAN.COM

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  13. There are a few things you should understand.

    1. Governments are not going to confess that they have been overtaxing the people and have accumulated reserves (surpluses). Such a confession would be political suicide.

    2. To protect their actions, governments will use any excuse to justify their position/actions. This is not only human nature, but survival.

    3. Getting involved with a government in this type of dialogue is a waste of time.

    4. This issue is so important that if the politicians do not understand it and take appropriate action, their challengers during the next election will.

    5. With using many excuses, the government is hoping that one item will stick and then demand that the baby be thrown out with the bath water.

    Key Response

    This is the key response to all excuses raised by governments/politicians regarding reasons they should hold reserves of the taxpayers money.

    If a government official/politician can demonstrate that holding and investing the surpluses individually or in total, for any reason including "it is the law", is equal to or greater than the amounts demonstrated in my economic impact analysis when reserves are returned to the people, then we will gladly reconsider our position.

    Until that is proven to our and the public's satisfaction, the maximum benefits to the taxpayers are when the excesses are returned to the people (elementary economics). When governments hold reserves, the taxpayers pay dearly. (See Economic Impact Section)


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  14. A blind mute sat in a boat. He could feel the slight wind and hear a bird on occasion. In the direction of the wind, he knew he could smell the vegetation of land. He tried rowing into the wind and found effort. It would take a lot of that to reach land, but how much? And for how long?
    The waves seemed to be slapping on the small hull with greater frequency and louder voice. A million thoughts raced through his mind. "If only I could row harder, things would be better, but even then, I don't think I could do it by myself." "I wish there were others in this boat, but I cannot tell." "When the disaster hit us, I knew there were many like myself." "Are they here?" "If only I could be sure."

    The man again felt a small spray of salt water and reflected, "If I don't row, I am lost. If I do row, it might prove futile since I could lose anyway."

    A distant faint clap of thunder kissed his ear and it was as an angel asking, "What sort of man are you anyway? Do you need a guarantee of success in order for you to do anything? If others are in the boat rowing, and you sit by and do nothing, then what sort of man would you be? Do you need the support of others in order to row, or even to be a man?"

    A small drop of water moved to his lips and painted the taste of salt. He could swear he again heard the voice, "A man must first learn to lead himself. If effort is needed to attain a goal, then a man supplies it even when alone. You are bound by your mind, body and spirit, to row and row you shall do, for life offers no guarantees -- only the opportunity to struggle."

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