November 21, 2012
In June 2012 the Forest Preserve District of Cook County Board of Commissioners approved the issuance of $110 million in bonds to finance capital improvement projects and to refinance existing debt. This major financing decision was made without the release of an updated capital plan and before offering the District’s operating budget for FY2013. The 2012-2016 Capital Improvement Plan was released in January 2012 and makes no reference an upcoming issuance. However, the 2013-2017 Capital Improvement Plan has not yet been released. According to the District, it is estimated to be available by the end of the year. The District’s FY2013 Executive Budget Recommendation was released on October 18.
A similar situation occurred in October 2004 when the Forest Preserve District approved the issuance of $100 million in bonds to finance capital improvements, without public release of a detailed capital plan and without first offering its operating budget for FY2005. The Civic Federation opposed the District’s FY2005 proposed budget in large part due to the lack of transparency given to the public in the bond issuance and capital planning process.
Of the $110 million in bond proceeds approved by the District in June 2012, approximately $27 million is designated for land acquisition, with $8 million expected to be spent in FY2013. [1] The FY2013 Executive Budget Recommendation makes additional references to the bond issuance, but does not offer any useful details on how the bond proceeds will be spent. Overall, the District has failed to provide clear disclosure of its spending plans and priorities for the 2012 bond proceeds.
In its FY2013 budget, the District implies that some of the bond proceeds may be used to purchase vehicles. [2] The Federation opposes using long-term bond proceeds to purchase equipment or supplies that are not likely to have a useful life as long as the debt itself. This is because it is both more expensive and it pushes payment for that capital onto future taxpayers who will not benefit from its service. In other words, payments for issued debt should at least match the useful life of the assets purchased with debt.
Given the strides the Forest Preserve District has made in rationalizing its operations over the last few years, the Civic Federation is disappointed in the manner in which the District approved the 2012 bond issuance as they have denied the public full and accurate information on how millions of taxpayer dollars will be budgeted and spent. Taxpayers deserve a clear explanation of how funding sources and priorities are developed before obligating the taxpayers to pay for long-term debt and before financing decisions of this magnitude are made by the District. Prior to proposing and finalizing new bonds, the District should identify in detail how the bond proceeds will be spent in an updated Capital Improvement Plan and budget document.
The Federation will be releasing a full analysis of the District’s FY2013 proposed budget and testifying at the public budget hearing later this month.
[1] Forest Preserve District of Cook County FY2013 Executive Budget Recommendation, p. 109
[2] Forest Preserve District of Cook County FY2013 Executive Budget Recommendation, p. 8.