By: Diane Benjamin
There are great teachers, I’m not sure Karyn Smith qualifies.
I watched part of the budget discussion last night that was continued from last week. Smith decided to inform viewers about bonds. She claimed paying interest for decades is what they are designed to do. The principal will be paid at the end. She claimed investors want that income stream.
Evidently she thinks tossing money out the window for interest is fiscally responsible. She is also wrong in the case of Normal.
I direct Ms. Smith’s attention to PDF page 177: https://normal.org/DocumentCenter/View/17188/CAFR20-FINAL-DOC
That page is from the 3/31/2020 financial statements and begins details of all the bonds Normal is holding.
On PDF page 179 is a bond where only interest is paid. PDF pages 184 – 186 show bonds with interest only for part of the term. PDF page 188 has another one. In between are other bonds the Town is paying principal and interest on. Obviously all bonds aren’t created equal. Karyn: Citizens see what the Town has done as throwing away MILLIONS of dollars for what the Town’s vision was – not what was NEEDED. Those millions of dollars could have been spent on NEEDS. The bonds were merely structured so the Town could make payments regardless of the total cost.
I know some people buy cars based on the payment, even if it means paying for 7 years. The cost of the vehicle is much higher when the payback period is extended. People who don’t care about the total cost and just want a fancy new car are willing to take the hit.
Alternatively, lots of people do 15 year mortgages which cost a little more every month but pays the house off in half the time. That does save tens of thousands of dollars over the life of the loan. Being fiscally responsible means reducing interest expense whenever possible.
If Karyn’s intent was to justify only paying interest and prove the Town had no alternative, she failed. I wonder if she teaches ISU kids that debt is good. I wonder if she pays interest only on her house. Is it too difficult for government to handle debt responsibly like adults do in their lives? Debt must be used at times, it is Normal’s excessive debt that is the problem.
Karyn claimed the debt is coming down. Last year the Town reduced it by a whooping $2,337,706 according to the Comptroller’s website: http://tinyurl.com/xq6ylcb1
Total debt was still: $85,752,874
See her comment at 2:24:30. Chemberly Cummings is nodding her head in agreement the whole time.
See one more thing to see about 10 minutes later. Kathleen Lorenz did a good job describing future problems: Ever increasing Salaries, Benefits, and Pension expense. She asked if the Town can afford the government they have in the future. At 2:37:25 Lorenz asks if the Town is spending more on road repairs in this budget as disputed by Stan Nord. Pam Reece doesn’t give a dollar number just a cursory “yes”, she had planned to deflect that question to the Finance Director Andrew Huhn. He was never given the opportunity to answer because Reece kept talking. Looks like we know the answer.
Reece is a master of misrepresentation. She phrases her answers with the same truth as a Bill Clinton response.
Rember him?
Clinton’s rationalization to the grand jury about why he wasn’t lying when he said to his top aides that with respect to Monica Lewinsky, “There’s nothing going on between us.” How can this be? Here’s what Clinton told the grand jury (according to footnote 1,128 in Starr’s report):
“It depends on what the meaning of the word ‘is’ is. If the—if he—if ‘is’ means is and never has been, that is not—that is one thing. If it means there is none, that was a completely true statement. … Now, if someone had asked me on that day, are you having any kind of sexual relations with Ms. Lewinsky, that is, asked me a question in the present tense, I would have said no. And it would have been completely true.”
How can such ignorance be allowed to represent our financial interests and practices? Over the course of last week I was doing my best to “read” the massive proposal for the American Rescue Plan. One of the components of the plan calls for relief to towns and cities that say they need fiscal help and rescue. Now some of those that are honestly and well led probably do. And regardless of which kind you live in, good and honest citizens unfortunately become the bycatch for those state and local government entities that mismanage money and prioritize the selfish ignorance of personal politics ahead of the needs of the communities they were elected to serve. It seems there have to be consequences for the mismanagement before relief, of any size or scale, is even an option. Or at least a requirement to accept funds. Until that accountability happens, perhaps relief should be entirely sized and focused on those families who really do need it. Clearly any government entity that can persistently and intentionally squander as much as ours do certainly don’t need more. Any good manager knows that there are times when you either have to change the people, or you have to change the people. It’s not likely that political leaders will change, so that means….Citizens, please. Many of you are part of the problem. Make an effort to understand and discuss the issues and how government is supposed to work, get involved, get out and vote, and for your kids sake please come together to use your legal system to hold your public officials accountable. Until you do, quit whining. Your inaction too often results in the election of idiots.
Well said!
We need local government that works for – and listens to – the people. MarcForMayor. VoteForKarl. David Paul Blumenshine, Steve Harsh, Donna Toney, Sheila Montney, Nick Becker.
The ‘bad guys’ keep winning because they are better organized and better funded. Your vote is important and greatly appreciated, but if at all possible try to volunteer for or donate to at least one of the above candidates.
Smith vilified and threw the book at Joe’s because they took federal assistance money. I wonder if she does the same to those receiving welfare and other government assistance programs?
LMAO! Of course Chemberly Cummings is nodding her head in agreement, she’s the idiot who got her paycheck garnished for signing a loan with a 97% interest rate. It takes some real brains to do that!
Get out to vote, ALWAYS! Who counts those votes and how those who count those votes if not monitored with honesty intact,,,well, they just stole the presidency on a massive scale. Yes, it can (and most likely already has) can happen here. Hate to burst any bubbles but trusting the demonrats while in charge is fools play.
Glad Karyn is NOT MY economics teacher! Yeah Karyn, bonds are GREAT for the people who make investments and hold long or short bonds of VALUE (and NOT junk bonds) . Many funds have them incorporated into their portfolio. Downside is that the citizens HAVE to pay excessive taxes to cover these more or less GUARANTEED bonds, which makes the people who don’t invest OR who cannot afford to invest, move even further down the income chain. The rich get richer and the poor get POORER Karyn. So you want uptown to be a “poor” town?
Just keep issuing bonds!! And ONLY pay the interest..
Economics 101…NEXT how to skew facts and numbers…
Wonder if Karyn is worried about all those poor hedge fund managers that got squeezed by retail traders. Haha! (By the way, that was fun to watch.)
Karyn is lost. She claimed investors want that income stream? Really?! So, she cares about the bondholders having a steady income stream? Interesting, how about the taxpayers? Paying just interest extends the borrowing period while lowering the monthly payments. This is important to the tax-and-spend Koos Administration that always seems to be looking for taxpayer money to spend.