elpasospeak

The April 7, 2013 front page of The El Paso Times was occupied by stories about the $800 thousand school district audit and the pending destruction of city hall. To me a more pressing matter was relegated to a sidebar in the Borderland section.  The county is getting ready to issue $162 million in certificates of obligation (CO’s) to build some outpatient clinics.

Not an emergency

I think the Texas Municipal League does a nice job discussion certificates of obligation:

“But the law also gives cities and counties the flexibility to issue debt through certificates of obligation on a shorter timeline.  This enables them to take advantage of favorable interest rates or an opportunity to acquire a property, to make emergency repairs after a disaster, or to address a critical public need without having to wait for the next uniform election date on the calendar.  Of all the debt issued by Texas cities in 2011, less than fourteen percent was through certificates of obligation.”

These clinics are not an emergency.  The decision to issue debt to finance them should be made through a bond election where the voters get to decide.  That is not to say that issuing the certificates is against the law.

Let the people choose

Actually we do have a choice.  By Texas law we have the right to petition for an election when we find out that the court intends to issue CO’s.  It would take the signatures of 5% of the eligible voters and the petition would have to be presented before the county issues the certificates.  The Times failed to mention that in it’s article.

By the way, this petition issue seems to be a big  reason behind proposition one of the proposed city charter amendments.  The current city charter allows a petition signed by 5% of the voters in the last city election to cause a ballot initiative.  Moving the city elections to November would greatly increase the number of voters and thus raise the bar for citizen initiatives.  Sneaky isn’t it?

Another blank check

The proposed order before commissioner’s court would allow the issuance of the CO’s for some period of time for some rate of interest.  Details like that evidently need to be worked out later.  You may want details, but the county just wants permission.  Actually section 3.02 of the order caps the interest rate at 4.75% and sets the maturity date at no later than August 15, 2044.

Bonds work differently than mortgages, but servicing the $162 million at 4.75% for 30 years would cost about $10 million dollars a year.  Hopefully the county will get a lower interest rate and the costs will be lower.

The newspaper article tells us that the tax will be about 2 cents per hundred dollar valuation, or about $20 dollars a year for a $100,000 home.  With a county property tax base of about $34 billion, two cents per hundred will raise about $6.8 million dollars in extra tax revenue per year.

That $6.8 million of tax means that the interest rate will have to be at about 1.5%.  My numbers may be off, but this does not look good.

This saves money — why increase taxes?

According to the article the hospital district says that the clinics will save us $17 million a year in emergency room costs.  Great!  The $10 million (on the high end) we would have to pay out needs to be subtracted from the $17 million that we are saving.  This gives us a $7 million savings.  That would actually allow them to drop our property tax rate by 2 cents instead of raising it.

Or does it save money?  What about the cost of operating the clinics?  The county judge evidently told the reporter that 450 new health care jobs will be created.  Will these be county employees?

Private vs. government

What I have heard from private practitioners about this is that they are not happy.  Roughly 1/3 of the physicians practicing in El Paso are affiliated with Texas Tech and the county hospital (now called UMC).  The private physicians  note that the proposed clinics are not in the really poor areas of El Paso but instead will cut into the business of private physicians.  I gather that the physicians in these clinics will be part of the Texas Tech combine.

What’s the hurry?

This is not an emergency.  Why won’t the commissioner’s court allow us to vote?  Are they afraid that once we look at this we will see things that we don’t like?

I don’t know how I would vote.  What I would like is a chance to look at this issue.

Muckraker