An Arizona court has decided Bond elections will be treated as legal and “enforceable contracts” for specific projects and for specific estimates.
Last month a Phoenix judge reinforced the reasonable principle that, when taxpayers vote to allow the government to go into debt, they should be confident the government will do what was promised with their money.
On September 14, 2011, Maricopa County Superior Court Judge, Eileen Willett stopped Cave Creek Unified School District (CC) from spending $13 million in leftover bond money on projects not listed in the Bond election. The Judge ruled CC School District violated its contract with the voters by diverting bond money to projects voters did not approve. (Goldwater, 2011)
Over the last decade, Tucson metro voters have made enormous “contracts” with Government that have become slush funds and financial black holes.
For example, prior to the Bond election, Regional Transportation Authority (RTA) promoters promised Tucson ‘s Modern Streetcar Project would cost about $163M, and have 4,100 trips per day over the approximately 4 miles of track. The City of Tucson now projects the cost at about $197million for 1,100 trips a day. This deceit is typical of many projects in the RTA
The huge hidden-cost and cost overrun problem is apparently nationwide with recent rail systems bankrupting local, state and federal budgets in the US with cost overruns and new subsidies that result from too few passengers. (For instance, look up the fiscal disabilities of the Coaster between San Diego and Carlsbad, Detroit’s 9-mile system, the Albuquerque-Santa Fe system, the PHX Blue Whale system, etc.)
Another more comprehensive example is Rio Nuevo. In 2008, Rio Nuevo Multipurpose Facilities District Board (RN) issued their first revenue bond for $78 million for 14 downtown projects. At the time, RN director, Greg Shelko said the first bond would pay for design work on Tucson Arena, a UofA Science Center/Arizona State Museum, Arizona History Museum and Tucson Children’s Museum as well as construction at the Depot Plaza parking garage and Clark Street freeway underpass. (Vitu, 2008)
Since then over $200 million RN funding has vanished. Some of the RN projects look familiar, but many unfamiliar projects and expenses have allegedly been funded by RN. And there are still two more Rio Nuevo Bond issuances scheduled for 2014 under this rather one-sided “contract”.
1) Taxpayers in CC school district voted $13 million on specific projects listed in the pamphlet for their November 2000 election.
2) Taxpayers in Pima County voted RTA could spend billions on dozens of specifically listed projects.
3) Taxpayers in Tucson voted for certain identifiable projects in Rio Nuevo.
Judge Willett ruled that taxpayers have an enforceable contract that requires voter approved bond revenues be spent only on voter approved projects. The words, “enforceable contract” are crucial and should be true for Tucson.
Other Arizona courts have not directly addressed this issue. But courts in California, Florida, Nebraska, Texas, and West Virginia have established the importance of a contract between government and voters in bond elections. For example, a California court stated in San Diego County v. Perrigo, “Without question the election created a contractual relation between the electors and the supervisors. The terms of the contract are contained in the Ballot proposal approved by the Electors.” (Goldwater, 2011)
Goldwater, (2011). Goldwater Institute. Friedman v. Cave Creek Unified School District. http://www.goldwaterinstitute.org/print/5897
Vitu, T. (2008). Tucson Citizen. $78 million Rio Nuevo Bond may be issued this month. http://tucsoncitizen.com/morgue/2008/12/03/104171-78-million-rio-nuevo-bond-may-be-issued-this-month/