Texas law allows Counties to issue Revenue Bonds, which are secured by the revenues of a project, without voter approval. But it is inconceivable that the legislature intended this provision to be used where the source of the revenue is not a third party. That is exactly the situation created by the Joe Corley Jail financing. The County established a special purpose company and then made itself the source of the revenue to repay the bonds. While this arrangement may have met the letter of the law, it is unimaginable that it met the spirit of the law. The members of the Commissioners’ Court who participated in this deception should be ashamed of themselves. It appears that the only conceivable reason this financing was structure this way was to avoid having to ask voters to approve the County using their credit for a deal like this. And that is outrageous.The blog offers a conservative critique of a financing scheme that's been all too common in Texas counties that mostly are perceived as conservative bastions:
the mess we have with the Joe Corley financing is exhibit number 1 as to why taxpayers do not want their elected officials expanding government into areas where we are on the hook for commercial risks. So far, what has happened to the Joe Corley financing is due to the County making a commitment on the jail’s utilization that made no sense. But the commercial risk continues, since there is no way anyone knows whether the federal use of the facility, which is committed only for 100 day increments, will continue. And if it doesn’t, does anyone really believe the County will risk its credit rating by not continuing to appropriate the lease payments?This outcome was both foreseeable and foreseen. See past Grits coverage, including this 2008 item which presciently concluded, "who will be surprised if Montgomery County's projected $2 million profit on the jail turns into a $4 million annual debt payment for which the county is on the hook?"
Joe Corley is a classic example of what happens when government gets into activities it shouldn’t. This expansion of government is a liberal action taken by people on the Montgomery Commissioners’ Court who claim to be conservative. This is not an example of limited government; it’s an example of expansive government. It is also, sadly, appears to be an example of not only a total lack of transparency, but possibly an intentional effort to dupe and bypass the voters. It is an example of why the Tea Party exists and why it is so important. We the people have negligently assumed our elected officials would behave responsibly. This appears to have been extremely naïve.
Related Grits posts:
- Scheme to finance county jail with immigration detainees puts Montgomery County finances at risk
- Entrepreneurial prison scheme in Montgomery County may lose nonprofit status for too-few local inmates
- 'Texas prison boom going bust'
- 'Private prison promises leave Texas towns in trouble'
- Private prison bubble bursting? Empty, speculative jails in Texas