Carson City Wants Their Money Back!

No. 43 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles

CARSON CITY CAN'T AFFORD V&T BOND PAYMENTS, ASKS FOR MONEY BACK FROM COMMISSION

12/18/09

Check out this article from the Nevada Appeal...

"Sales tax revenues dedicated to paying off bonds for the V&T Railway are expected to fall short by $300,000 this fiscal year.

"But Carson City Finance Director Nick Providenti said it's not this year's bond payments he is concerned about. The Carson City Convention & Visitor's Bureau has agreed to put up $100,000 and the V&T commission has about $200,000 in cash built up during the years when sales tax revenues came in higher than needed."

Well, don't say ex-Commissioner Mayor Marv didn't warn us! He said over a year ago this could happen, but assured us the Nevada Commission to Reconstruct the Virginia and Truckee Railroad could afford to cover the bond payments.

Depending on how you account for it, whose money is going to cover these bond payments? There's three ways to look at it.

1) Assuming all funds put into the project are segregated, then you could make a case that Carson City will simply be getting some of their original money back.

2) Assuming last in -- first out accounting, the $2 million in federal stimulus money is being used to pay Carson City to cover local bond payments. Well, stimulus was intended to bail out monetary malfeasance on the part of spend-happy local governments. I have to ask, why does everyone get so mad when banks were loaned TARP money and then pay it back with interest, but no one cares when profligate local governments get bailed out and don't have to pay it back.

3) Assuming all the funds are mixed together in a big melting pot, you have a combination of 1 and 2.

Just a year ago, when Mayor Marv made his comments, I contacted Carson City's Finance Department and asked them about this. I was sent a spreadsheet showing the "conservative" accounting used so that the taxes would always cover the bond payments.

Oops! This is not unique to Carson City, local governments all over the country spend much more than they can pay for. These types of situations will be "sprouting like weeds." Time to sell munis!