Let the voters decide on debt

He's right that the issue is not about politics. It is, however, a significant issue about the constitutional right of Raleigh residents to vote on whether the city should incur debt.

The state constitution has contained for years a limitation on the power of local governments (as well as state government) to go into debt by pledging the faith and credit of the governmental unit. That constitutional limitation is the guarantee that voters in that locale have the right to vote to approve or disapprove bonds for the proposed debt.

Unfortunately, a 1991 state Supreme Court case approved a carefully worded method for skirting that constitutional requirement and allowed governments to incur the bonded debts without allowing the voters to decide.

That bond funding vehicle, known generically as Certificates of Participation or COPS, allows the government to pledge property such as schools, the courthouse or the Public Safety Center as collateral for the bonds, rather than the "faith and credit" of the governmental unit. This court-made distinction is mere form over substance, in that banks lending the money fully understand that a governmental unit is not going to sit by and let government facilities such as schools or jails be foreclosed on because of a default on the bonds.

The use of COPS since 1991 in North Carolina has resulted in an explosion of bonded debt that state and local governments have run up without ever getting the people's approval through bond referendums. The total amount that state and local governments have borrowed using COPS undoubtedly is in the billions of dollars, although the exact amounts are not easily available for review.

While this accumulation of debt might be acceptable because of the facilities constructed, three things need to be remembered.

 The voters never got a chance to vote on whether the debt should be incurred.

 In most instances, interest rates were higher because of the use of COPS instead of the "faith and credit" guarantee of voter-approved general obligation bonds.

 As debt has increased, the amount of debt service to pay off the bonds has escalated, further stressing government budgets and reducing available funding or requiring tax increases.

The excuses offered by Meeker and City Manager Russell Allen for bypassing voter-approved bonds as required by the constitution simply don't stand up to scrutiny. They acknowledge that voter-approved bonds carry a lower interest rate but argue that interest rates on COPS are comparatively low in the current market. They also say there is a sense of urgency to issue the bonds - but there is a statewide primary election coming up in May and a general election in November. There's plenty of time to do paperwork necessary to put a bond referendum on the ballot.

What has gone unsaid is the fear that voters might not approve the bonds, particularly if a tax increase is necessary to justify the cost of borrowing the money.

There might be a compelling case for a $205 million Public Safety Center as well as the $250 million in other projects to be bundled in a bond package approaching half a billion dollars. If there is a compelling case, then advocates should make it to the public and allow the voters to decide. That's what the framers of our state constitution contemplated - and expected.

A return to the constitutional practice of voter approval for bonded debt will help restore a sound financial practice and a constitutional limitation on elected officials. A failure to do so, and continued end runs around the constitution through the use of COPS, can only inextricably lead our state and local governments closer to the financial debacle that we now see in California.

Yes, Mr. Mayor, this isn't political. It's all about the Constitution and the rights of our citizens.