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The county debt bomb explodes

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People were dumbstruck last week when Mecklenburg County government suddenly announced it would close half of our libraries to keep the county solvent.

This, we were told, was the result of the fact that the county was in the hole at least $20 million this year and up to $85 million next year. The official story line was one of shock. Even County Commission Chair Jennifer Roberts appeared genuinely floored by what she called a "tsunami" of red ink. How did this happen?

It's kind of like the wife who runs up a credit card on the assumption that her husband will get raises every year. He stops getting raises and then one day she takes the card out to go shopping and it gets declined. She initially assumes that something must be wrong with the magnetized strip, since it's a bit worn and faded from so much use.

She calls her hubby to see what's wrong and asks him to call the credit card company to see if they'll issue a new card with a fresh strip. The credit card company representative explains that they've hit their debt limit and it can no longer be raised. Given that, they realize the kids won't be getting new clothes for school this year, even though the old ones no longer fit, because now a huge part of the family's budget will be taken up with debt payments.

To save face, the family explains to their friends that the reason the kids are wearing clothes that are too small is that the family is struggling in this economy, which is partially true, since that contributed to the husband not getting a raise this year. The real problem, of course, is that the family assumed boom times would last forever and spent accordingly, living right on the edge of fiscal sanity.

Accordingly, last week County Commissioner Dumont Clarke blamed the county's troubles on the local economy. "This used to be a boomtown -- we're now looking at boom turn to bust," he tweeted.

While it is true that the recession dealt county finances a final blow, the downturn merely sped up the economic reckoning that has long been headed its way.

The last few years in particular have been like watching a slow-motion train wreck where the passengers are in denial. Former Commissioner Dan Bishop tried to warn his colleagues before he retired. Even local blogger Jeff Taylor, who has never worked in the county's finance department, has been forecasting an economic crash for the county since 2005.

A sixth grader in advanced math placement could have figured out that the spending trajectory the county was on was unsustainable. Between 2000 and 2008, county spending grew 71 percent while the county's population grew by 28 percent. During that time, the county engorged itself on debt, doubling its debt service payments in just eight years.

The plan to pay for that? Assume that property values would continue to grow annually at 2006 levels forever, without ever hitting a snag or a recession. For that to happen, property values would have essentially had to double every decade.

This year, property tax revenues increased only slightly and sales tax revenues declined slightly -- and the county's debt bomb finally exploded.

As I've pointed out a lot recently, the county commission and the county manager were so out of control by 2008, it took warning letters from our bond rating agencies and the Charlotte Chamber that they had hit their credit limit and could lose their AAA credit rating to finally slow the borrowing down. The commission and county management was so oblivious, or so utterly in denial, that before it was all over, they asked voters to approve hundreds of millions of dollars worth of bonds they'd put on the ballot without realizing they lacked the funds to pay for them.

If a monument to that debt has been built recently, it has to be the rocks jutting out of the ground along the new King's Drive parkway. Why the county thought it was necessary to pay an artist $220,000 to carve some squiggly lines into man-sized rocks and implant them in cement is anyone's guess, but the county-mandated arts project, like the greenway it sits along, will be paid for with borrowed money. That debt is what is socking it hard to the school budget.

Commissioners will tell you that they had no choice but to borrow that money, since a lot of it paid for schools. But a lot of that went for wasted construction, including failure to consolidate under-filled schools, the teardown and renovation of perfectly good facilities because it was "unfair" that other schools were newer and failure to prioritize needed school construction over political payola, parks, splash planets and other goodies.

"If it was bad management, we would be the only one going through this," County Finance Director Hyong Yi told WFAE last week. "Everyone else would be fine."

But as WFAE pointed out, neighboring Gaston County, which is also suffering from a crushing regional double-digit unemployment rate, has an $8 million surplus for the year and expenses $5-million less than what was budgeted for the year.

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