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College bonds test liberals 



Lots of us have a reflexive need to pull the lever for any proposition to either tax or borrow for education on the premise that even a little good in the pursuit of learning will trump a big potential for waste.

What good liberal wants to carry the guilt of denying a new classroom, a nanotechnology lab or a hookup to the research corridor to a youngster, even if the biggest winners are well-to-do investors?

But Referred Question 2, which would restructure the state’s college savings bond debt to free up money for college construction and technical equipment, tests that premise. How excited can you be about sinking the state another $200 million or so into debt for $150 million of new college facilities when the institutions already have been on the greatest construction boom in the state’s history? In 10 years, the state has spent $917 million on general improvements at the public colleges and universities, and private gifts have erected at least another $250 million of buildings on the campuses.

Let’s be frank about it. Even if the college projects are not urgent or they are mere gingerbread to burnish a college president’s vitae, there are a lot worse things to spend $150 million on than college facilities. The legislature, in fact, finds them every two years. It spent $50 million this year on local pork projects when the money could have been spent on college buildings.

But that raises the toughest question for the college bond advocates. In spite of the foolish spending by lawmakers on local re-election projects this spring, the state still wound up with a $100 million surplus, and it is expected to bulge to $300 million by the end of the budget cycle. Why are we borrowing money for capital needs, which will bear a huge load of interest, when the treasury is awash in surpluses that ordinarily are used for just such projects?

Their answer is that you can never trust the legislature to choose the right priorities and, besides, the Arkansas Supreme Court may rule sometime that the legislature ought to spend lots more than it now proposes to spend on improving public school facilities. A legislative study shows that those needs surpass $2 billion. That $300 million surplus could come in handy, although the legislature might not feel compelled to spend it on K-12 schools either.

But it begs the question to say that because the legislature squanders the public wealth we should compound the error by substituting another wasteful funding tool, long-term debt. Actually, no serious effort was made to fund the priority college projects from the ample capital improvement fund last spring. The college savings bond plan was in the works.

How urgent can all the projects be — at least one for every institution — when the state Department of Higher Education sent word to them this summer that the bank was about to open so they should come up with their facility needs?

Bond issues always breed suspicion because the laws that authorize them are written in the arcane language of bond counsel. The act authorizing the governor to call an election on refunding the existing college bonds and issuing new ones, all totaling $250 million, is no exception. At first, the explanation was that the college bond law also circumvented Amendment 20 to the Constitution, which requires a statewide election on each bond issue obligating the state’s credit, just as the new highway bond law does. (That is Referred Question 1 on the Dec. 13 ballot.). Then the official word was that it did not.

It apparently does allow future bond issues without an election, but it is not clear when and under what circumstances. Early on, the law says there is an exception to the need for an election before issuing bonds but does not identify it. But apparently no election will be required any time in the future that the Arkansas Development Finance Authority wants to refund the bonds that will be issued as a result of the Dec. 13 election or subsequent refunding bonds, on and on.

Bonds are not inherently evil and the state in fact has historically been too chary about investing in infrastructure, its public schools being the prime example. But they should be reserved for instances when the purposes are essential and the needs too large for the government’s usual revenue stream.

Gov. Huckabee, to his credit, has not been a hidebound conservative. His tenure, in fact, already has seen a greater accumulation of general-obligation debt than all other Arkansas governors have since 1837 combined — $677 million and counting. Another $60 million is about to be incurred for water projects, part of $300 million of general-obligation bonds authorized by a 1997 law and 1998 election. The elections Dec. 13 could raise the debt beyond $1 billion.

We are nowhere near George W. Bush territory yet, but let’s go to the bank only when we have to, even for the kids.


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