As we here at For the Good of Illinois build out our OpenTheBooks website, we come across all kinds of stories exposing the never-ending spending stream of the Illinois state and local government spending axis. One excellent example of this was last night’s meeting in Geneva sponsored by Geneva Tax Facts, a truly excellent example of local grassroots activism.
Robert McQuillan put together a very detailed analysis of the recent Geneva 304 School District and their use of “premium bonds.” These bonds, regardless of whatever spending purpose they serve, essentially lock in higher than market interest rates. In exchange for handcuffing Geneva taxpayers to these rates, the bond sellers provide for “premiums” paid to the school district up front.
In the article linked below, I’m quoted as calling this a “legalized money-laundering scheme.” The actual effect of these bonds is to spend tomorrows dollars today, saddling future taxpayers with debt they never voted on. Premium bonds are an abuse of the system, and should be illegal to use for municipal/district finance.
A guest speaker, Bruno Behrend, called the use of premium bonds “legalized money laundering” and said the Legislature should make them illegal. Behrend is an adviser to a group called For the Good of Illinois and the Heartland Institute, a conservative think tank.
Not only are these financial instruments legal, but they are exceptions under the now-nearly-worthless PTELL (Property Tax Extension Limitation Law). This means that your local school board, elected by 8-15% of the most financially interested voters in off-year elections, can quietly destroy your future property values by shackling your home to decades of future debt.
A few years ago, the Daily Herald did a series of stories called “Broken Bonds.” This series detailed how districts across Illinois abused them. Their site no longer has the series available, but I would contact them to find out if they can reproduce it. It was a chilling account of how your “elected” school boards saddled you with debt.
Regardless, the event in Geneva was quite successful. Bob McQuillan has created a good model for a local activist group. If you want to get one of these rolling in your town, go to www.genevataxfacts.com and contact them.
This movement must become a statewide campaign to rein in runaway school districts and the special interests that profit off of them. This will require strong legislation from Springfield, not your local school board.
As my detractor at the event said, “Just like Bruno said, you focus on the state.” We need legislators to cap property taxes. You can’t do that at the local level, fighting the entrenched political machines of 6900+ government entities.