An Affront to Your Wallet and Your Civil Rights
I just read the harmless-sounding Transportation Reinvestment Zone Act (SB 36) that is before the New Mexico State legislature. Good transportation is important for economic development. Given that the bill has been endorsed by the Revenue and Tax Stabilization committee it has a real chance to pass. But there is no glee here. I can only marvel at how development interests will use this vehicle to plunder funding for public services and simultaneously limit your civil rights.
At its core, SB 36 is a scheme to hijack funding for education, health care and public safety to finance public road improvements and infrastructure that benefits private development projects. In most cases, no legislative approval is required. Private developers are not required to contribute a penny.
Proponents claim the legislation is necessary to fund the expensive Paseo Del Norte overpass in Albuquerque, but this bill creates mechanisms that go far beyond that. It was rushed through the Senate Corporations Committee without allowing opposition testimony, and with a clause that will allow it to go into effect immediately, rather than in July. The skids have been greased.
SB 36 allows cities and counties to designate Transportation Reinvestment Zones within their borders. These Reinvestment Zones become separate political entities to be governed by the local city council or county commission. Reinvestment Zones are exempted from local ordinances, including planning and zoning. If you live or own a business in one of these zones, you have limited opportunity to determine what laws are put in place. Rules that govern city and county operations are not in place to constrain how the governing board operates. You are in a democracy free zone.
The Reinvestment Zone board is given broad powers to launch infrastructure projects such as roads, drainage, sewers, and utility improvements. The legislation calls these projects "public", but the intent is clearly to benefit specific private interests such as hotels and shopping centers that normally have to pay for their own street and sewer improvements.
Funding for Reinvestment Zone infrastructure projects would come from taking a cut of the Gross Receipts Taxes collected in the Reinvestment Zone. The legislation blithely assumes that local police, fire, and other services will not be impacted by the set aside, or by the costs of supporting the new Reinvestment Zone bureaucracy. Even more alarming, is the potential impact on the state treasury. Unlimited sums of money could be redirected from core education, health care and public safety services to subsidizing infrastructure projects benefiting private businesses.
When state government resorts to such drastic measures as creating democracy free Transportation Reinvestment Zones, you would think there would be some sizable public benefit. Well not really. Reinvestment Zone bonds are projected to be extraordinarily expensive. An equivalent 10 year, four percent revenue bond backed by $10 million in cash flow would support $14 million more in proceeds.
And why would the legislature ever vote for a measure that creates expensive financing, adds a layer of government bureaucracy, and limits civil rights? Because powerful supporters will shout "this measure creates jobs." No politician in his right mind wants to be caught voting against jobs! The reality is that proposals like SB 36 can eliminate more jobs than they create. Funds taken from public services result in reduced employment outside Reinvestment Zones. And many of the jobs in Reinvestment Zones would not be new. Developers that would have built anyway will simply use the law to beef up their bottom lines with your tax dollars.
We don't have to turn democracy on its head to finance road and infrastructure projects, even for Paseo del Norte. Instead of hijacking funds from core government services, we should use the state road fund or special property tax assessment districts that were designed for infrastructure financing. If we do not have enough money in the road fund, then let's be honest with voters and either raise the gas tax or forego the projects. Or better yet, develop a transparent and cost effective funding mechanism that requires up front participation and accountability from private beneficiaries.
Don't fall for complex tax and financing policies masquerading as job creating "economic development." Reinvestment Zones create the illusion of sound finance, but they are the sub-prime mortgages and credit default swaps of the public financing world. After all the painful financial lessons we've learned recently, we're too smart to invest in schemes like that. Aren't we?
State Senator Steve Fischmann represents district 37. His web address is stevefischmann.com |
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