Wednesday, November 30, 2005

American Family Association of Arkansas Says NO on Bonds

By Debbie Pelley (click "comments" below for article).

posted by Debbie Pelley at Wednesday, November 30, 2005

1 Comments:

Blogger Debbie Pelley said...

Myth and Facts on Highway Bond Proposal

Referred Question No 1 on the ballot of state special election Dec 13, 05

Known as the Arkansas Interstate Highway Financing Act of 2005


American Family Association believes there is a great amount of confusion about the facts involving the highway bond proposal to be voted on in the special election December 13. The following list of myths and facts should help clarify the issue. After researching this issue, AFA believes the welfare of Arkansas families will best be served by voting against the highway bond proposal.


Myth: Voting for the highway bond proposal will provide the citizens of Arkansas with better highways. Arkansas is a poor state and must take advantage of this plan.

Fact: Passage of the highway bond proposal would allow the commission to issue more bonds to take the debt back up to $575 million (and to do so time and time again). 1 The amount of interest and bonding fees for that $575 million would come to at least $217 million. Those two figures came from a Highway Commisioner. That would be 38% - 38% for interest and bonding fees. The poorer the state the more crucial it is to put every dollar possible into highways. A poor state like Arkansas cannot afford to give away 37% (or $217 million) to bankers and lawyers. (Other researchers put the interest and bond figures at a much higher rate.) much higher for a number of reasons.)

Myth: Many people think that unless we pass this highway bond proposal immediately, the state will be losing federal money that could be used for Arkansas highways.

Fact: According to the Arkansas Highway commissioner, $421 million for the highway improvement will come from federal money; but also according to an Arkansas Highway commissioner, Arkansas will receive this money even if the voters reject the highway bond issue and decide to pay as we go.


Most citizens have no clue that the new bonds won’t be issued until 2010, and the law that the legislature passed stated this issue could be voted on in a general election. Scheduling a special election 12 days before Christmas is rushing the issue and costing the state a million dollars. As someone else has stated, there is no urgency because there is nothing to prevent the Legislature from passing a law every session allowing for a highway bond election to be held in conjunction with the next general election.


Myth: Many people think this bond money will provide better highways and roads in their communities.

Fact: This money can only be spent to maintain or rehabilitate existing interstate highways and not to build new roads. (See quote from the law below.) 2 Many educators have complained that the community roads and highways by which students travel to school have received a lesser percentage of money and are in horrible condition, much worse in proportion to our interstates. Yet this bond issue would only acerbate that problem. (Put in conflict in the law here)


Myth: The highway bond proposal is fair because it allows the people the right to vote on bond issues as required by the Arkansas Constitution. Several legislators have reported they, too, looked at the bond issue in this light until they learned otherwise, a fact that was evidently intended by proponents to be overlooked..

Fact: Randy Ort , spokesman for the Arkansas Highway and Transportation Department was quoted as saying, “The commission would be able to re-issue bonds up to the $575 million cap as many times as it wanted without further voter approval” These bonds would be secured by the full faith and credit of the state which means general revenue funds can be used.” 3 This flies in the face of the principle and wording of Amendment 20 to the Arkansas Constitution which guarantees the voters a right to vote on any state indebtedness. See quote from Amendment 20 below. 4 This is why many people are saying this highway bond act is unconstitutional.


Sen. Denny Altes, R-Fort Smith said it right: “The bond proposal would commit the state to an endless cycle of debt and our kids and our grandkids will be paying for the debt from our highways probably long after our highways are gone.


Myth: There is no problem in giving five Highway Commissioners total authority to oversee $575 million dollars (in essence a revolving credit card with maximum debt of $575 million bond indebtedness) which will be paid for from funds designated for that purpose.

Facts: The highway financing act states, (27-64-310. c) “If the amount of designated revenues is insufficient to make timely payment of debt service on the bonds, the payment shall be made from the general revenues of the State of Arkansas.” General revenues comes from sales taxes and income taxes to be used to support all the necessary programs in Arkansas like the public school system, social service, health services, and the penal system.



The highway bonds would be issued by the five-member Highway Commission, a constitutionally independent body whose five members are not elected by the people and are not answerable to anyone who is. According to Amendment 42, Section 4, to the Arkansas Constitution, “A Commissioner may be removed by the Governor only for the same causes as apply to other constitutional officers after a hearing which may be reviewed by the Chancery Court for the First District with right of appeal therefrom to the Supreme Court” The difference between highway commissioners and other constitutional officers like the Governor, etc. is that we don’t vote for highway commissioners; and the Highway Commissioners are appointed to terms of 10 years, longer than other constitutional officers. 5 Putting this amount of money, a revolving credit card with maximum debt of 575 million, in the hands of five unelected officials with no real accountability sets up a situation ripe for corruption.



Myth: No new taxes will be needed

Fact: Issuing bonds to maintain roads will continually put the state in debt and eventually lead to tax increases to pay back the debt. Paying high interest rates is one of the greatest reasons that people end up in debt and even bankruptcy. No one knows what the interest rates will be at that time or what other needs Arkansas will have. The poorer the person or the state, the more necessary it is to refrain from debt and interest. Indebtedness will only increase the need for more debt and eventually decrease the condition of our highways. The bonds won’t be issued until at least 2010 or later.


Myth: The legislature will still have supervision over the way the $575 million is spent.

Fact: Unless someone can prove differently, there will be no oversight by the legislature or legislative committee. The proponents of the bond issue are not being totally honest on this. Researchers say the legislative oversight on the Arkansas Highway Commission is limited to the amount of money they have to spend. If the bond issue passes, then the Commission will have the money set aside and approved by the vote of Arkansans. That fact precludes any need for any oversight by the legislature. And even if the legislature had oversight and could reject certain construction repairs, then the Commission could still borrow the money and issue bonds and could force the hands of legislators.


See documentation below:


Contact:

Debbie Pelley, Board Member

American Family Association of Arkansas

dpelley@cox-internet.com

Phone: 870-935-9438 Cell 870-919-1057


Bob Hester, Director

American Family Association of Arkansas

blhester@futurelinc.com

Phone: 870- 932-5065 Cell 870-243-561


Link to the highway bond proposal law, SB 430 and now Act 685 ftp://www.arkleg.state.ar.us/acts/2005/Public/Act685.rtf

(1)

27-64-304. Authorization — Purposes.

(a) Subject to the one-time approval of the voters in a statewide election, the State Highway Commission may issue bonds from time to time if the total principal amount outstanding from the issuance of the bonds, together with the total principal amount outstanding from the issuance of bonds pursuant to Arkansas Highway Financing Act of 1999, § 27-64-201 et seq., does not at any time exceed five hundred seventy-five million dollars ($575,000,000).


(2) (b) The purpose of the bond issuance shall be:

(1) Accelerating interstate highway improvement projects already underway or scheduled;

(2) Funding new interstate highway improvement projects;

(3) Financing the restoration, reconstruction, and renovation of interstate highway improvements within the State of Arkansas; and

(3) (ADG article 11/28/05 by Jason Schultz. )


27-64-310. Sources of repayment.

(a) The bonds shall be general obligations of the State of Arkansas secured and payable from the designated revenues and the general revenues of the state.


(c) If the amount of designated revenues is insufficient to make timely payment of debt service on the bonds, the payment shall be made from the general revenues of the State of Arkansas. ftp://www.arkleg.state.ar.us/acts/2005/Public/Act685.rtf


(4) Amendment 20 “Bonds prohibited except when approved by majority vote of electors. - Except for the purpose of refunding the existing outstanding indebtedness of the State and for assuming and refunding valid outstanding road improvement district bonds, the State of Arkansas shall issue no bonds or other evidence of indebtedness pledging the faith and credit of the State or any of its revenues for any purpose whatsoever, except by and with the consent of the majority of the qualified electors of the State voting on the question at a general election or at a special election called for that purpose.” Link to the Arkansas Constitution http://www.sos.arkansas.gov/ar-constitution/arconst/arconst.htm

(5) Amendment 42 § 4.
A Commissioner may be removed by the Governor only for the same causes as apply to other constitutional officers after a hearing which may be reviewed by the Chancery Court for the First District with right of appeal therefrom to the Supreme Court http://www.sos.arkansas.gov/ar-constitution/arcamend42/arcamend42.htm

Other quotes from the law:

27-64-310. Sources of repayment.

(c) If the amount of designated revenues is insufficient to make timely payment of debt service on the bonds, the payment shall be made from the general revenues of the State of Arkansas.

(a) The bonds shall be general obligations of the State of Arkansas secured and payable from the designated revenues and the general revenues of the state.

(b) The bonds shall be payable first from the following designated revenues:

(1) The portion designated by the State Highway Commission of funds received or to be received from the federal government as federal highway assistance funding allocated to the state and designated as federal highway interstate maintenance funds; and

(2) Revenues derived from the distillate special fuels tax levied under § 26-56-201(e) that are available for expenditure after any distributions required by the Arkansas Highway Financing Act of 1999, § 27-64-201 et seq.


(a)(1) No bonds shall be issued under this subchapter unless the authority of the State Highway Commission to issue the bonds from time to time is approved by a majority of the qualified electors of the state voting on the question at a statewide election called by proclamation of the Governor. [Confusing language in the law that could lead to the belief it had to be voted on every time, but other passages make it clear this is not true.]

(2) The election may be in conjunction with a general election or it may be a special election.

3:36 PM, November 30, 2005  

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