HUDSON | Dem ploy to trip up Stapleton was an embarrassing misfire
Author: Miller Hudson - July 26, 2018 - Updated: July 25, 2018
In the unlikely event you were hoping for a respectful, policy-dominated political debate in Colorado this year, House Democrats serving on the Legislature’s Capital Development Committee dashed those expectations Monday morning. In the spirit of the World Cup’s quadrennial coincidence with our state elections, a yellow card for partisan tripping appears in order.
House Democrats distributed a media advisory over the weekend alerting the fourth estate that they intended to “…discuss Treasurer’s Office Delay in Launching Funding for Capital Construction (sic)” at a regularly scheduled committee hearing. Their memo went on to say they had sent a letter to the Treasurer last week expressing concerns regarding his delay in issuing Certificates of Participation (COPS) authorized by SB 17-267 and also requesting that Walker Stapleton personally attend this hearing to explain his foot dragging.
To put all this in some kind of context, SB 17-267 was the omnibus funding “fix” approved in the waning days of the 2017 session that reclassified the Hospital Provider fee, previously regarded a Tabor tax, by identifying it as a Tabor exempt fee. This ploy, freeing up nearly $700 million beneath the Tabor spending cap, is currently being challenged in court by the Tabor foundation.
Billed as a rural economic development measure, SB 17-267 has more moving parts than a Swiss watch. One of them was approval for the issuance of $1.8 billion in COPs, collateralized against existing state assets. In other words, title to state buildings will be transferred to private investors who will then recover their money through 20 year lease purchase contracts with state agencies. If this sounds a little like a bundled mortgage derivative, you wouldn’t be far wrong. However, you won’t have an opportunity to purchase a share of these COPs as an alternative to your 401K.
In fact, Ryan Parsell, the Deputy State Treasurer who testified in Stapleton’s place, plausibly explained that squabbling among the numerous stakeholders, including the attorney general, required more time than anticipated to wordsmith agreements that will make Colorado’s COPs attractive to “foreign investors.” Presumably this means Russian oligarchs, offshore trusts and sovereign investment funds. Just in case you were wondering how the 1 percent successfully vacuum up virtually all the gains in the American economy, privileged access to zero risk bonds is one way.
Whether the issuance of COPs constitutes good public policy is worthy of thoughtful debate. We should not kid ourselves; this is clever fiscal engineering designed as a work around Tabor debt restrictions – another distortion of generally accepted accounting practice. If capital projects were funded directly with bonds, voter approval is required. Instead, the Legislature proposes to borrow against existing, paid for assets and then use these funds to launch projects demanding immediate dollars, many of them not truly capital investments. Paying for routine maintenance with debt obligates future taxpayers to fund what we should pay for ourselves today. Whatever assurances are offered to the contrary, COPs surely cost more in the long run. You don’t have to be a conservative to question the wisdom of that strategy.
Parsell assured the committee that $500 million in COPs would be out the door by the end of September, well before the June 30, 2019, deadline set forth in the enabling legislation. No, issuance did not occur on the first day of July 2018 as may have been possible. But there was no evidence offered that this delay reflects incompetence, negligence or venality. Democratic protestations that a 90-day delay might lead to exorbitant additional expenses rang hollow when most authorized projects remain in a design phase.
In campaigns you often have to worry more about your friends than your adversaries. If House Democrats genuinely thought this manufactured tempest in a teapot would bolster the campaign of Congressman Polis, they were mistaken. It proved a petty and embarrassing misfire. They should allow their candidate, possessed of a keener business mind, to call the shots going forward.