Bond referendum a mode of the past, or primed for return?
As Montgomery County officials again eye a budget tightened by construction project debt, a handful of county government watchers pine for the days when voters had more direct control over the county’s borrowing.
“I think it’s the biggest financial issue in Montgomery County,” said Arnold Saari of Blacksburg, a one-time Montgomery County schools superintendent and a former leader of the Montgomery County Taxpayers’ Association. “Because if you can’t vote on debt, there’s no limit to what they can pile on you.”
Saari and a small contingent of budget hawks still occasionally rise at county meetings to urge the Board of Supervisors to hold referendums on the financing of major projects. Voters should have been able to decide, they argue, if their taxes would rise to pay for work like the recently completed courthouse or the ongoing $124 million construction of two new high schools and renovation of a middle school.
But the budget critics’ audience may be dwindling. Saari admitted recently that aside from the supervisors themselves, few people probably know what he and others are talking about. It has been a quarter-century since Montgomery County voters were last asked directly if the county should borrow money for a major project.
“They don’t realize… we used to be able to vote on bonds,” Saari said.
Calls and emails to county officials around the New River Valley indicated that Pulaski County held the region’s most recent bond referendum. In a 2002 vote, residents approved borrowing to pay for school improvements by a 2-1 margin, Assistant County Administrator Robert Hiss wrote in an email.
The basic outline of a bond referendum is this: To pay for new buildings or repairs to older ones or other such large projects, localities often borrow money through the sale of bonds. For decades, Virginia required counties – although not towns or cities – to gain voter approval through a referendum before issuing what are called general obligation bonds. These bonds require the county to do whatever was necessary, such as raising taxes, to repay them. If voters decided against a referendum, the county could not borrow the money.
But over time, the General Assembly opened other avenues for funding major projects. Counties can sell bonds through entities like the Virginia Public School Authority or various state loan funds without referendums. Many of these bonds use the facilities themselves as collateral. Montgomery County and many other localities across Virginia have turned away from holding referendums before incurring debt.
Budget watchers like Barbara Skinner and Jack Selcovitz of the New River Valley Tea Party think a popular vote in Montgomery County could have headed off last year’s construction debt-driven 12-cent increase in the real estate tax, a jump that moved the tax rate to 87 cents per $100 value.
“Our county debt has ballooned through the issuing of bonds in 2008, 2009, and 2011,” Skinner wrote in an email last week. “If a referendum is held on issuing bonds, then I think citizens are much more likely to hear the facts about the money being requested along with the long-term ramifications of taking on the proposed debt. I think the $50 million price tag for the new Blacksburg High School was high. … I think this community could have used a lot more conversation about the building proposals in 2011, and a referendum would have pushed the communication.”
“All bond issues should be placed on the ballot for referendum,” echoed Selcovitz in an email. “This allows both sides of the issue to state their case to the public … This allows taxpayers the opportunity to express whether they wish to spend their tax dollars.”
Some Montgomery supervisors, like their counterparts elsewhere, have argued that voters effectively make their decisions about debt in the general election – that residents choose supervisors who will represent them in a host of decisions, including whether to issue bonds.
“That’s what you’re looking for the elected officials to do, is exercise their judgment,” said Robert Lauterberg, managing director for financial services for the Virginia Municipal League and Virginia Association of Counties.
Ann Hess and Lindsay West, both Montgomery County supervisors during the county’s last bond referendums of the 1980s, said they would have appreciated the additional financing options that counties now have.
To push a bond referendum, “You had to have a package where everybody in the county saw they were getting something for their money,” Hess recalled last week. Taxpayers might end up spending more because projects are put off, she said.
West agreed. “I’ve always had mixed feelings about bond referendums … Sometimes it’s hard to get that message across to people about what that need really is,” she said.
Montgomery County’s last bond referendums show the difficulties of winning voter approval.
In 1977, as officials debated a $250,000 repair to Blacksburg High School’s roof and a $460,000 renovation to Christiansburg Middle School, Supervisor Roy Collins called for a referendum. “The people are in the dark” about the projects’ cost, he said.
West and other supervisors disagreed, however, and funded the project through bonds that could be issued without a countywide vote.
But in 1980, supervisors decided residents should weigh in on a $1.4 million plan to upgrade athletic facilities at Montgomery County’s four high schools. In a newspaper story, West, then the supervisors’ chairwoman, summarized the board’s opinion as, “Voters should have a chance to say whether they wanted it or not.”
A bond issue was rejected by a vote of 8,310 to 6,568, Voter Registrar Randy Wertz said.
Saari, who was the schools superintendent at the time, chuckled as he contrasted his opposition to more recent bond issues to his support for the 1980 proposal.
“It went down the drain but that’s OK,” he said. Instead of replacing bleachers and making the other improvements all at once, he and the school board worked them into their budgets over the next few years, he said.
The last bond referendums that Montgomery County held came in 1986, when two bond issues were decided in the same election. A $2.4 million issue was proposed to repair leaking roofs at Blacksburg High School and 13 other schools, along with a $2.5 million issue to pay for expanding the jail and the sheriff’s department offices. The latter would be the first, and to date last, time that Montgomery County turned to a bond referendum to pay for something besides schools.
A group called Citizens for Responsible Government opposed the bond issues, while the county sent out a news release supporting it.
Sixty-four percent of voters in 1986 approved the bonds for the roofs, and 59 percent for the public safety improvements.
West, still the supervisors’ chairwoman, welcomed the result in a newspaper story, saying “it wasn’t an easy issue for the voters … This is not a county that makes a practice of borrowing money.”
Nearly three decades later, West said she still thinks voters should be involved in decisions about debt – but that it probably makes more sense to let supervisors have the ability to take advantage of low interest rates and to approve major repairs and other projects without a long referendum process.
“I guess my feeling now is that that’s what we elect supervisors to do. … The projects need to be done and the supervisors need to make the decision to move ahead with them,” West said.
Lauterberg said the General Assembly’s expansion of county supervisors’ authority to issue bonds mirrored the growth of services that counties were expected to provide. Virginia initially assigned more duties to town and city governments than to the rural counties, he said.
But over time, “Many of the counties have become more similar to cities than they were in the past. … And I think the financing has become more similar to cities than it once was,” Lauterberg said.
Among Montgomery County supervisors, Chris Tuck was only one to express strong opinions about bond referendums when contacted for this story.
“Maybe I’m too much of a Libertarian … but I believe getting people involved in our government is important,” Tuck said.
“I ought to be able to explain to my constituents and say, ‘Look, we need to borrow that money.’ … And if I can’t … maybe I’m wrong.”
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