Oklahoma High Court asked to review bonding practices
Published: July 13th, 2012
The push by Senator Patrick Anderson of Enid to limit bond issues to originally-stated purposes (and to secure legislative approval) is headed to the Oklahoma Supreme Court. The Court’s resolution of the question could have implications for a wide range of bonding practices across the state government.
Anderson announced Friday (July 13) that state Attorney General Scott Pruitt is presenting to the Court a question Anderson has advanced repeatedly over recent years.
As Anderson describes the newest issue, “Three years ago the legislature approved $25 million dollars in bonds to be used as a match with federal funds to construct a series of low water dams along the Arkansas River. Promoters of the project claimed it would have a $2.8 billion economic and create 9,450 jobs. The project never happened and the bonds were not issued.”
In recent years, Sen. Anderson and a few other legislators, including state Rep. Jason Murphey of Guthrie, have scrutinized bonding practices.
Anderson has been critical of the Higher Education system’s “Master Lease” program, contending it is allowing steadily increasing “off-budget” public debt without legislative oversight.
He points, as an example, to the surge in debt under the Master Lease Real property program, which has seen authorized bonds increase from $102.7 million in 2010 to a present total of $250 million.
Concerning that issue, Anderson contended in May, “The amount of debt being proposed in the real property program has increased exponentially over the last few years. While not all requested programs are funded, there appears to be no maximum limit to the cumulative total of the debt that is being incurred under this program. This is not right or fiscally responsible of the Legislature to allow this to continue.”
At the May meeting of the Oklahoma Council of Bond Oversight, bonds were authorized for issuance by the Regents for Higher Education ($40.3 million, as part of a broader package worth at least $200 million) and the Water Resources Board (a total of $92 million), and $8 million for pooled financing for Economic Development.
Friday, in comments provided to CapitolBeatOK, Anderson (who is an attorney) summarized his critique of the envisioned reassignment of the bonds to the Zink project as follows:
“1. The parties that are seeking to have these bonds issued are attempting to change the use of the bonds funds from that which the legislature originally intended – that violates Article X, Section 16 of the Oklahoma Constitution.
“2. There is no source of repayment for these bonds. Thus, the issuance of these bonds would create a debt of the state without a vote of the people – that violates Article X, Section 25.
“3. Since the Zink dam is not owned by the state, the issuance of these bonds for repairs on this dam would result in making a $25 million gift of state funds – that violates Article X, Section 15.”
Anderson and Murphey have not been alone in scrutinizing bond transactions gaining traction outside of legislative review. After reassignment of the Arkansas River projects to the Zink Dam was proposed, the Council on Bond Oversight voted unanimously (on Jan. 26 of this year) that the shift would require legislative approval. However, the state Capitol Improvement Authority subsequently directed the council to change its position.
At an emergency meeting on February 9, the shift in position occurred – and Anderson asserted “this was the first time in state history” the council had reversed itself on a bond issue. Immediately after that, Anderson sought an attorney general’s opinion, saying he believes the shift in the bonds’ purposes is unconstitutional.
Anderson said Pruitt has made the right call with Friday’s announcement: “The proper way to address this matter would be to bring it before the legislature for consideration. Unfortunately, several former and current state leaders have attempted to circumvent the legislature and the state constitution in this process. Therefore, I applaud the decision of the Attorney General to take this matter directly to the Oklahoma Supreme Court. Obtaining an official court decision against this practice is the best way to insure that no one attempts to do this again.”