County sales tax

I really do think government has too much money to spend. I think no matter how much they have, they will always want more. It is an insatiable desire that as voters and taxpayers we are obligated to oppose. But here is the dilemma. If county voters vote against the upcoming county wide sales tax increase it will deny county residents the opportunity to benefit from a tax they will be paying to Cleveland anyway. County schools will not benefit, county services will not benefit. All the extra sales tax will go to the City of Cleveland and that is why The People News supports voters approving the 0.5% county sales tax referendum.

Who would have thought Cleveland voters would have been so easily duped into thinking the increase in sales tax was primarily for schools? Once again the Cleveland City Council saved their skin, but only for the time being. Unless they are bailed out with stimulus money, I foresee even with the sale tax increase, Cleveland will be running out of money before the end of 2009 - 2010 financial year.

So, if you want Bradley County to get its fair share of the taxes you pay - vote for the countywide sales tax increase.

There, I've said it. I am for this tax, so what do you think of that?

From the fry-pan into the fire.

There has been a lot of publicity given to the shaky bond deals practiced by many local governments in Tennessee. In the rush to get more for the taxpayer's buck, counties and municipalities clamored for ever more creative ways to finance loans and of course, there were financial advisors and institutions ready and willing to provide the service. Both Cleveland and Bradley County had as their financial advisors a company called Morgan Keegan, a company that also underwrites municipal bonds, some fixed rate, others variable rate. Governments were attracted to the variable rate loans for the same reason individuals are; they tend to be lower initial rates compared to fixed rate loans. But there are risks associated with variable rate loans that are not present with fixed rates. The variable rate loans supplied to governments were swappable to hedge against rates rising too far. If the rate went high with one lender, the bond was swapped to a lender with lower interest rates, much like refinancing a home mortgage. Variable rate loans are not reliable and you can be faced with higher interest rate than with the stable fixed rate loan especially when money is tight. Morgan Keegan supplied the services governments required but it seems to have been the rush to get a better deal that was the prime driving force behind the variable rate loans, not any shady practice on the part of Morgan Keegan. The repayment plan for these loans were financially complicated and difficult for the layman (and the media) to fully understand. Every adult should understand the basics though; the more potential gain, the more potential risk.

Now the bottom has dropped out of the financial market in these types of variable loans, those spending taxpayer monies are looking for a scapegoat for their own gullibility. Morgan Keegan seems to be the scapegoat of choice and has been fed to the wolves to defer attention from the real culprits.

It has been suggested that it is unhealthy for a financial advisor to also deal in the bonds he recommends. Tennessee Governor Phil Bredesen, is on record as condemning the practice. Note that he did not condemn the practice until it failed.

Some local politicians did condemn the practice before the failure and were quick to say so. Cleveland Mayor Tom Rowland and City Councilman David May, had been complaining about the conflict of interest Morgan Keegan had and suggested a change to the Tennessee Municipal Bond Fund, that is associated with the Tennessee Municipal League.  The Municipal League is an association of government employee unions and groups. It also uses as its figure heads, a large majority of Tennessee city mayors. The TML also supplies insurance to government employees, partly paid for by the taxpayer. The Tennessee Municipal League is no friend to the taxpayer. It was the driving force behind the push for a state income tax and is a strong lobbyist for larger and more restrictive government. Bradley County has zoning today mainly because of TML lobbying and there could be no airport in the county without zoning.

There is an apparent conflict of interest with a financial advisor also selling bonds but also there is a conflict that neither Tom Rowland or David May is concerned with regarding an employee association supplying government with insurance and municipal loans. Also, the fact that Rowland is a past president of the TML and May is a current officer is also a conflict. What is good for Morgan Keegan, is also good for the TML.

Can it be that Morgan Keegan's downfall will be the Tennessee Municipal League's windfall? Obviously Rowland and May hopes it will.

That's what I think. What do you think?

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