Betting bonds on turnout Debate on city financing is squashed by ballot slickery

Robert Robb Republic columnist Mar. 5, 2006 12:00 AM

The Phoenix bond election presents some interesting questions that will not be discussed in a low-turnout affair characterized by insensate boosterism, tax deceit and an outgunned and ineffective opposition.

Now, I am not a conservative who's allergic to debt. Financing large capital public projects is usually preferable to paying for them in cash as they are built. Because of interest, the bill is higher in the long run, but the burden is less on taxpayers in the shorter term. Generally, capital left at work in the private sector can produce benefits beyond the financing cost of the public project. Additionally, spreading the cost of large-scale projects over time more equitably distributes that expense among beneficiaries.

Nevertheless, debt is a costly way of doing business, something about which the Phoenix bond proponents are desperate to avoid an honest discussion.

The City Council has pledged to keep the tax rate at its current level. That is the foundation of the claim by proponents that the bond program involves "no new taxes."

The intent is to cause voters to conclude that voting yes won't cost them any more money. But proponents are generally careful not to say that because it isn't true. As property appreciates, the same tax rate generates a larger tax bill. And, as all Phoenix homeowners now know, property values have been rising rapidly.

Poor Michael Crow, ASU's president, is new to this con and apparently wasn't fully briefed on its intricacies. While others hide behind the rate-pledge fig leaf, he outright says, in a ballot statement in support of the ASU downtown campus bond, that all of its marvelous benefits can be obtained "for nothing more than you pay today." That's true only if you own property that isn't going to appreciate a penny for next 25 years.

So, what's the true cost to taxpayers?

Based upon conservative assumptions about interest rates and assessed value growth, the entire bond program is estimated to cost the average homeowner in Phoenix slightly more than $1,000 over 25 years and the average business slightly more than $18,000. Since the assumptions are conservative, actual costs are likely to be less.

So, what will taxpayers get for this expenditure? That's where some of the interesting questions arise.

The city is asking voters to approve $878.5 million in bonds. But only about $350 million, or around 40 percent, is for infrastructure to support core city functions, such as police, fire, streets and storm drains and city administration. So, the meat-and-potatoes portion of this bond program is fairly skimpy.

Another 35 percent, or more than $300 million, goes to soft services and amenities that cities customarily support: parks, libraries, museums and the arts.

A full quarter of the bond program, well over $200 million, goes to things that are not traditionally financed by city governments, at least in Arizona. That includes capital support to some charitable non-profits and a few charter high schools. The bulk of the dough, however, goes to build higher-education facilities, particularly a new downtown campus for ASU.

Traditionally, university facilities in Arizona have been built through state appropriations or through bonds issued by the Board of Regents and serviced by institutional revenues.

The city believes that a university campus will be the catalyst to turn downtown into a happening place. Whether students, conventiongoers and business and government apparatchiki form a complementary or conflicting blend, I leave for others to analyze.

The more troubling feature of the ASU downtown campus is that it extends ASU's virtual monopoly on higher education in the Valley.

The assumption is that if the city builds the facilities, the state will fund the students that come. And the assumption is that the students will come because they have no choice.

More choice, however, is precisely what higher education in the Valley most needs, particularly smaller, more intimate and student-friendly settings. Making ASU even bigger is a step in the wrong direction.

There isn't much meaningful movement toward choice and diversity in higher education at the state level. The downtown ASU campus, however, seeks to at least partially pre-empt that discussion, and that's unfortunate.

These issues - the real cost of the bond program, the mix between core city services and amenities, and the advisability of the city getting into the education business - are important, worthy of serious discussion and debate.

That debate, however, hasn't taken place. And probably won't. Instead, the election will be decided, as virtually all city elections are, by controlling the turnout.

Regardless of how you feel about the bond program, there's something unhealthy about the state of democratic discussion and participation in city government.

Reach Robb at robert.robb@arizonarepublic.com or (602) 444-8472. His column appears Sundays, Wednesdays and Fridays.