A legislative committee is considering how much leeway local governments should have in financing projects.
The issue is taking on debt without a bond and without a direct vote of the taxpayers.
One work-around is to use Certificates of Participation (COPs) for lease/purchase financing. That allow an investor to purchase a share of lease revenues, instead of the bond secured by those revenues.
Tim Hruza, Lincoln Independent Business Association legal counsel, says those are being used too frequently.
“We believe it reasonable to place some sort of limit or restriction on this trend that seems to be getting out of hand,” Hruza told an interim study committee of the legislature. “Public credit cards without limits should not exist.”
The League of Nebraska Municipalities believes elected officials are given authority to finance projects without another vote of the people.
“We believe that when voters go to the polls to elect their councilmembers, their mayors, their village board chairs, school board members, whatever that public entity may be, they understand that they are asking them to utilize their best judgment,” Lynn Rex, league executive director, testified.
Rex says voters already ensure a system of checks and balances on elected officials.
“I have never met that municipal official in Gretna or any place else who decides to run for public office and let’s see how we can run up the budget, let’s see how we can increase property taxes, let’s see how we can tax, tax, tax and spend,” she says.
Hruza points to Nebraska’s long tradition of putting bond issues to a vote of the people.
“Good public policy demands that the taxpayers who are obligated to make future debt payments have as direct of a say in the issuance of that debt as is reasonably possible.”