Mayor Harvey Johnson lashed out at the Bond Commission last week after he learned from the Clarion-Ledger a six-million dollar bond package was not approved by the government body. The newspaper reported on his reaction:
"Mayor Harvey Johnson Jr. urged the State Bond Commission today to reconsider its decision not to approve $6 million in state bonds to fund water and sewer improvements.
“We were counting on those dollars,” Johnson said in a hastily called news conference at City Hall. “This is truly a great setback.”
Johnson learned the commission had already made its decisions for a planned fall bond offering by reading about it in The Clarion-Ledger.."
Harvey even made a veiled threat to the state:
"Johnson said another option is to demand state offices in Jackson catch up with unpaid water bills. The mayor said state government owes the city millions in overdue water charges.
Exactly how much the state owes the city was not made available at the news conference. After mentioning the debt, Johnson steered the discussion back to his appeal to the commission.
“We’ve opted not to cut state government off,” he said. “But that’s not the story.”
There is a reason Harvey was very upset. It seems he counted his chickens before they hatched:
"Johnson said he already had included the money in his proposed budget for the fiscal year beginning Oct. 1. He said he was unaware the commission could turn the request down after it had been approved by the Legislature and signed by the governor.
“I didn’t realize that we needed representation at the bond commission,” he said. “Perhaps it was wrong for us to assume.” Article
The Mayor is indeed correct. It is wrong for us to assume. One should always look at the facts and in this case, the first fact to be examined is the law that was passed earlier this year by the Legislature. HB #1701 was passed by the Legislature and signed by Governor Barbour. Section 44 (p.213) states:
"(1) (a) The Mississippi Development Authority (MDA) is authorized to provide one or more interest-free nonrecourse loans to the City of Jackson, Mississippi, to assist the City of Jackson in paying the costs associated with making repairs, upgrades and improvements to portions of the city's water and sewer systems infrastructure located in the areas within and in close proximity to the state grounds and lands described in Sections 29-5-2 and 29-5-81, Mississippi Code of 1972. The aggregate amount of all loans made under this section shall not exceed Six Million Dollars ($6,000,000.00), and the time allowed for repayment of a loan shall not exceed seven (7) years."
The law further states there is a four-year window for the bonds to be issued: "No bonds authorized under this section shall be issued after July 1, 2013."
How does Jackson get this money? Section (b) states:
"(b) The City of Jackson must submit an application to the MDA. The application must include a description of the purpose for which assistance is requested, the amount of assistance requested and any other information required by the MDA"
Did Jackson submit an application? JJ is (say it out loud class) filing a public records request today but for the purposes of this post, it will be assumed one was filed in a timely manner. JJ spent several days investigating this story. This columnist has spoken to numerous individuals in state government, local government, and the business community. To put it bluntly, it appears Jackson dropped the ball.
Everyone at the Bond Commission and at the DFA's Bond Advisory Division is well aware of Jackson's water problems this year. They suffer along with the rest of us when the water system breaks down. They do not have it in for Jackson, contrary to the conspiracy theories residing in the logical labyrinth that is Donna Ladd's mind.
The Bond Commission is not an "antiquated vestige of days gone by" as it was called by the Clarion-Ledger yesterday but is a brake on the whims and horsetrading of the Legislature. A Senator from Pontatoc wants a $30 million bond issue for his district, a Senator from Biloxi wants a $60 million bond issue for his district, then another one from Jones County will want a $10 million for his district. They all agree to vote for each other's projects and voila, there is suddenly a monster bond bill the state can ill-afford. The Bond Commission can thus act with the power of a line-item veto as it approves and issues all bonds passed by the legislature.
The Clarion-Ledger doesn't understand this because it doesn't understand simple concepts such as debt, interest, and bankruptcy. It rarely, if ever, opposes higher spending or bond issues proposed. No surprise since its favorite remedy for budget problems are tax increases. It advocates giving the Legislature the keys to the car and letting it drive Mississippi off the Cliff of Debt. DFA has no power under the law to decline to issue bonds for a particular project. It merely acts as an underwriter of bond requests- there is no ability to decline a bond issue on its merits alone.
The Bond Commission meets five to six times a year. State Treasurer Tate Reeves stated last week the Commission reviews up to one hundred bond requests at each meeting. The saga with Jackson's "water bonds" started several years ago. The state found some money available to improve Jackson's water system. Jackson only had to submit an application. The application had to be filed before a deadline. Frank being Frank, it was not filed before the deadline. More money was found a few years later, an application was required, none was provided on time. As one can imagine, the desire to carry Jackson's water (pun intended) diminished as efforts to help Jackson were literally ignored by the City.
The legislature passed the bond package. The bonds are available to Jackson in the form of non-recourse loans. For those of you over at the Jackson Free Press where taxes are rarely paid, that means the state can not sue the city for repayment if it defaults on said loans (Disclaimer: the terms of the loan will spell out the non-recourse features). However, the Bond Commission is hesitant to issue bonds when there are other options available to the requesting government similar in nature.
Jackson can request loans to improve its water infrastructure through two loan funds. The Mississippi Department of Health offers the State Drinking Water Revolving Loan Fund. The MDH website states:
"The Improvements Revolving Loan Fund Program is intended to provide low interest loan funding to counties, municipalities, districts and other water organizations that are tax exempt, for the construction of new water systems, the expansion or repair of existing water systems, or the consolidation of new or existing water systems. There is no set limit on the amount of the loan, but a maximum amount may be set at the discretion by the Local Governments and Rural Water Systems Improvements Board, as long as expenses meet program guidelines. As well, the funds from a loan may be coupled with funds from other source(s) to meet other needs of the overall project. The present interest rate is 1.95%, compounded monthly, to be amortized within 20 years of the project completion. Expect the loan process to take 6-8 months." See matrix, list of related documents
DEQ administers the Water Pollution Control Revolving Loan Fund Program. There is no maximum loan amount, the interest rate is 2% of below, and there is a twenty-year repayment schedule, and no interest accrues until the project is completed. Highlights of program, Program documents
There is a natural tension between local governments and the Bond Commission. The local governments want bonds to fund their programs, the Bond Commission mission is to ensure the state is not loaded down with debt as has occurred in New Jersey, California, and other states. The Commission wanted to know why it should add six million dollars to the state's burden of debt when there are other low-interest loans available to Jackson from the state. Keep in mind the non-recourse nature of the loans Jackson sought meant the state's options to recover its funds from Jackson were limited as well.
The bonds were not denied, they were not rejected, they are still sitting on the table where they await further review. Jackson has four years to obtain the Commission's approval. One factor that hurt Jackson was Mayor Johnson fired the lobbyists representing the city. Lobbyists. They wine and dine politicians, throw money around, and are the privileged class in Jackson. However, the good lobbyists are experts on how government works and what procedures need to be followed when dealing with government. Jackson did not replace its fired lobbyists. Jackson also hired a new public works director a few months ago as well. Jackson thus was left without any true expertise on how bond packages such as this one were handled at the state government level.
Mayor Johnson chose to attack the Bond Commission instead of finding out what went wrong and how the problem could be solved. DEQ and MSDH both told this correspondent late Friday afternoon no one from the City contacted them last week about the loan programs mentioned above. Neither Mayor Johnson nor any of his representatives have contacted the Bond Commission as of the close of business yesterday in regards to the bond package. Instead of granting interviews to every reporter in town and running for every camera he could find, Mayor Johnson should have ran down to the Governor's or Treasurer's office to find out what is required to obtain approval and what he could do to make it happen. That is called leadership, Harvey, not lobbying or groveling. You are the borrower, the state is the lender, and the lender has some questions before it approves the loan. What Harvey pulled last week reeked of Frank Melton. Who can forget Frank? Grandstanding for the cameras, making headlines, yet when one looked behind the scenes, nothing actually got done.
Harvey should apologize for the empty threats he made to the state. Empty threats, you ask? What do you mean, Kingfish? Remember when Harvey claimed last week the state was past due on its water bills and owed the city millions of dollars? Well, it turns out the Mayor was "misinformed". That is what they call it now when one makes something up because the Clarion-Ledger reported Sunday:
"Johnson called a news conference and issued a thinly veiled threat to collect on "millions" in unpaid city water bills supposedly owed by state government offices.
The Clarion-Ledger asked Johnson's office to provide more information, and Barbour spokesman Dan Turner issued a statement that the governor was unaware of any unpaid bills. Late in the day, city spokesman Chris Mims issued a statement that Johnson had been misinformed."It appears that a city staff person provided an inaccurate figure after misreading a report," Mims said, adding the state is "fairly caught up" with its water bills." Article
As written earlier, such behavior is rather Meltonesque. Simply put, Mayor Johnson got caught with his britches down and instead of showing leadership, threw a tantrum. It wasn't the Bond Commission that included six million dollars in Jackson's budget. A six million dollars that never existed. Harvey should take some responsibility, meet with the Bond Commission, and take whatever action needed to get its approval.