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An expensive free lunch 

All government free lunches are equal. You pay for them later in spades. So it will be with the giant bond-refinancing program announced ceremoniously last week by Gov. Huckabee. He will call a special election on Dec. 13 to empower the state to borrow $250 million to pay off old college construction bonds, issue new ones and give the colleges and universities $150 million for new construction and equipment. At the same election, voters would give the state Highway Commission power to incur long-term debt forever, as long as the obligations never exceed $575 million. Whenever the bond daddies and lawyers deemed it to be a fine moment, the commissioners could issue more bonds without going back to the voters. It would amount to a permanent line of credit with the bond dealers and investors. For the taxpayers, all this will be totally painless, the governor and a phalanx of lobbying interests assured everyone. “I can’t imagine any organized opposition,” Huckabee said. “I frankly can’t imagine any opposition, period. It’s taking money we’re already spending. It’s not asking taxpayers to make any more investments. It’s not asking them to cough up any more money.” It actually is hard to imagine much organized opposition, or at least any powerful opposition, since a good deal of the political power in Arkansas was smiling behind Huckabee as he spoke. The bond programs bring along for the ride the transportation industry, much of the financial industry, contractors and suppliers, big bond lawyers and all the public colleges and universities. Though she is powerless except for her vote, the average taxpayer has grounds to be at least skeptical of both propositions. The state owes it to people to divulge all the figures, including what happens if the voters were to reject the proposals. Here is the answer in brief: Highways would continue to be improved at a rapid pace, not far behind the pace of construction that would occur if more highway bonds were issued, and the state would continue to appropriate large sums nearly every two years for needed capital improvements at the colleges and universities. The state’s underfunded public schools and health care for children and the poor would be fiscally safer. Look, college construction is nearly always a good thing and so are better highways, but that is not the question voters need to ask themselves. If you are borrowing large sums of money and legally binding a significant part of the state treasury every year to paying the principal and millions of dollars in interest to bond holders, something else is not going to get the money. In the case of the college savings bonds, those who will be robbed are primarily children in the public schools. In the case of the Interstate bonds, the losers will be the rest of the state’s primary and secondary highways, which will get a big infusion of money if the bond vote fails. Potentially, the schools could be affected by the Interstate debt, too, because the law specifies that if a special 4-cents-a-gallon diesel tax and Arkansas’s share of federal Interstate maintenance money ever fall short of what the bondholders need — a real possibility in looming energy and federal debt crises — the money will be taken straight out of the general fund, which pays for public education. The law, written by the highway people, says a shortage in debt-servicing money must not be taken from the highway fund but from revenues that support the schools. That little sentence, inserted repeatedly in the highway law, is never mentioned. But here is the big catch to the college bond refinancing: When the state goes into large-scale debt, it is saying that the beneficiary is the state’s highest priority, its greatest need. It is not the state’s public schools, ranked universally near the bottom in the industrialized world, or their wretched buildings, so graphically described in the court testimony and in the legislature’s own 2002 survey of schools in every county. Rather, it is the condition of university campuses. In the past 10 years, more money by far has been spent on buildings, equipment and campus improvements at the universities and the two-year colleges than on all the public schools in Arkansas combined. No one has condemned the physical conditions of university campuses, except perhaps the University of Arkansas at Pine Bluff, the state’s predominantly black institution. The legislature could have appropriated $300 million for college buildings the next two years without borrowing a dime, but it chose pet projects instead and left another couple hundred million dollars on the table. Huckabee and the director of higher education said college enrollment had risen by 33 percent since the college bonds were first authorized, but most of that growth has been in two-year colleges, which would get very little of the bond proceeds. A bond program for public school construction, where the needs are measured in the billions, would have made perfect sense. Instead, the legislature and the governor were content to earmark a little more than $100 million. There have been recent two-year periods when the University of Arkansas at Fayetteville alone spent that much on buildings and equipment. Huckabee implied that nothing else would be disturbed by extending two bonded debts much further into the future. But the extended debt would codify indefinitely the theft from public education. People should find a way to ask questions about these big debts because the popular prints will not.
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