When 13% can lay a financial obligation on 100%

From Fewer than 4000 people just approved boosting Providence Rhode Island liabilities by $515 million by Mary Pat Campbell.

About ten years ago, for a couple of years, there was a lot of discussion of the impending financial crisis centered on chaotic and unhealthy municipal finances, principally arising too generous retirement commitments with too little funding of those pension obligations.

For a deficit hawk, it felt like people were finally paying attention.  But the moment past.  Journalists are averse to issue with numbers and the issue was embarrassing and difficult for the Democratic Party with whom most of the mainstream media are closely allied.  With federal aid and some economic growth in the last couple of Obama's years and the first three under Trump, some balance sheets were propped up.  

But the problem remains for whenever we again focus on it.

Campbell is focused on a particular example in Rhode Island, especially the public bond issuance by Providence to help, theoretically, to shore up their pension obligations.  Campbell walks through the details, showing that this is primarily a shell game with likely a bad outcome for the voters of Providence.

What I was struck by was the numbers related to something I have been considering for a while.  In my city, Atlanta, the City always gets approval for massive multi-hundred million dollar bond issuances.  It has always struck me as a classic Public Choice Theory (outcomes are determined by concentrated interests rather than distributed voter concerns) case study.  

We all know that a good deal of the bond will be wasted.  We know there are a lot of sweetheart and lucrative deals around who does the bond issuance.  We know that very little of the bon proceeds will be spent on issues unrelated to the stated purpose of the bond.  Happens all the time, year in and year out.

Why?  Well, Public Choice Theory is the glib answer.  But Campbell makes it very concrete in terms of exactly who is committing who in terms of the bond.  

There was a special election on Tuesday, June 7, in which less than 4% of Providence, Rhode Island voters showed up.

Of that 4%, 70% agreed to the issuance of $515 million in pension obligation bonds. This would be a new liability, on top of the liabilities they already have. Sure, they’d get a $515 million cash infusion, which they’d give to the pension plan… but I will get to that in due time.

2.8% of voters obligated 100% of taxpayers to pay the costs of issuing the $515 million bond.  Campbell goes into the details of why this was probably a bad idea.

But I am focused on that issue of 2.8% of voters obligating 100% of taxpayers.  Seems like a pretty massive breakdown in representative democracy.  

In the case of Rhode Island, apparently there is one further step.  The results of the bond referendum of Providence must next go to the state legislature for permission to proceed.

But the sharp disconnect between interested voters 2.8% obligating the other 97.2% of their fellow taxpaying citizens make me ask, what are the numbers for Atlanta.

Atlanta does not have to go to the State Legislature for approval.  They vote a new bond and thats it.  

So how well supported are these bond referendums.  The following numbers are a little loose as it is surprisingly difficult to get exactly contemporary accurate figures.

From this source, we know or City of Atlanta:

There are 497,642 who reside in City of Atlanta.

City of Atlanta has 422,000 registered voters but this includes, the dead, the voting dormant and those who have moved away.

City of Atlanta voting age population is 413,000

City of Atlanta has 368,000 Atlantans who have voted at any time within the past few years. 

In major elections (national, Mayoral, etc.) voter turnout runs about 20%.

There are about 500,000 residents of the City of Atlanta who pay the local sales taxes as well as property taxes.  To that could be added the 100,000 commuters who work in Atlanta during the day and also pay sales taxes for anything purchased in Atlanta.  

Now, how about the most recent $213 million bond referendum which was approved by 83% of voters in May 2022?  That was 46, 415 voters.  

46, 425 votes divided by 368,000 active voters is 12.6% of active voters yoking 100% of taxpayers (500,000) to a future stream of bond payments.  

If there is concern in some quarters about filibusters and supermajority votes, is there any concern anywhere about the inverse?  About a super-minority of the population obligating tax payers?  All sorts of definitional issues and philosophical issues attached to informed consent and exercise of voting duty, etc.  

Still, that a super-minority of 13% of voters (likely with a concentrated interest) being able to obligate everyone else strikes me as an unstable feature.