Representative Mike Jacobs

Audit reports aren’t what I would call “pleasure reading,” but they are necessary reading for elected officials like me who care about the way your tax dollars are spent.  You can learn a lot from an audit report.  For example, consider this passage from a June 25, 2007 KPMG audit report on the spending practices of the DeKalb County Government:

“We reviewed the purchasing and contracting procedures relative to Information System (IS) consulting services.  We noted that there were numerous purchases that were required to be competitively bid in accordance with the County’s purchasing policy, that were not bid.  The County’s policy states that purchases in excess of $50,000 should be competitively bid except if there is a Georgia State Contract or Federal Contract covering such purchase.  The County’s Purchasing and IS Department did not solicit competitive bids on several purchases in excess of $50,000 when there were no applicable Georgia State or Federal Contracts.  In addition, the County’s purchasing policy requires the Board of Commissioners’ approval when a total contract exceeds $100,000.  Relative to the IS Department’s use of consulting services, on numerous occasions no such Board of Commissioners approved contracts could be located.”

That’s a mouthful, but here is what it means in plain English:  There is a state law that requires the DeKalb County Government to perform a competitive bidding process whenever the value of goods or services it is seeking to obtain exceeds $50,000, and to obtain approval by majority vote of the county commission whenever the value of goods or services it is seeking to obtain exceeds $100,000.  For certain technology consulting contracts, the county administration has been doing neither.

That’s bad news, but it gets worse.  DeKalb County officials, including the county’s highest ranking non-elected administrator, Richard Stogner, have been approving purchases in amounts like $49,000 — just below the competitive bidding threshold — to the same vendors for the same services over and over and over again.  These purchases are intentionally designed to skirt the competitive bidding and commission approval requirements.

In fact, county officials have paid a select group of vendors more than $22 million in flagrant violation of competitive bidding safeguards.  These safeguards are in place to ensure that taxpayers receive the best services at the lowest possible cost.  They are designed to thwart the practice of giving high-priced sweetheart deals to favored vendors.

I was astonished to learn that violating the competitive bidding and commission approval safeguards is not a crime.  That’s why I have drafted, introduced, and am planning to work toward passage of House Bill 922 during this year’s legislative session.  HB 922 will make this official misconduct a misdemeanor, punishable by a fine, jail time, or both.

The Audit Committee of the DeKalb County Commission, chaired by Commissioner Elaine Boyer, is investigating the failure by county administrators to comply with state competitive bidding laws.  As is the case with many things in our “strong CEO” county government, there is only so much our elected commissioners can do to rebuke county administrators who have run amok.  Thanks to HB 922, however, any future efforts to skirt competitive bidding safeguards can be prosecuted as a crime and appropriately handled as a fraud on the taxpayers.

A version of this post was published in the January 23 edition of the Dunwoody Crier.

DeKalb County has decided to shell out at least $11 million (that’s a very conservative estimate; the real number likely will exceed $14 million) of our tax dollars for a new performing arts center to be located on a former dairy farm on Rainbow Drive south of I-20. From the hodgepodge of highly questionable funding sources being used to finance the project, it sounds like the new arts center should be put out to pasture.

DeKalb taxpayers will be paying the principal and interest on bonds to finance this performing arts center for years to come. The county once again has succeeded in using the taxpayers’ credit card without asking for the taxpayers’ consent through a referendum.

The majority of the funding will come from a clever bond financing scheme being run through the DeKalb Development Authority. The Development Authority has floated $6 to 7 million in bonds which will be used to build the facility. After construction, the Development Authority will own the arts center, lease it to the county, and the county will use our tax dollars to pay the principal and interest on the bonds as rent payments to the Development Authority.

Under House Bill 181, which I authored, the legislature passed, and Governor Perdue signed into law earlier this year, this very type of bond financing scheme now requires a referendum. However, the bonds for the performing arts center were floated back in 2006, before the enactment of HB 181. Today, you would have had an opportunity to vote on the proposed performing arts center.

The performing arts center also will use funds from the 2005 general obligation “parks and greenspace” bond issue. As you may recall, that’s the bond issue we did vote on. General obligation bonds already require a referendum.

There was a list of parks and greenspace projects approved by the voters in the 2005 bond referendum. The arts center – which is neither a park nor greenspace – wasn’t on the list. In fact, a performing arts facility intentionally was left off the list because of concerns about how to fund the long-term costs of the project.

Another part of the funding is the interest earned from holding onto the proceeds of the 2005 parks and greenspace bond issue for approximately two years. You fund the principal and interest on these parks and greenspace bonds directly out of your property taxes. The county has been holding onto the proceeds for its own pet projects, rather than proceeding with the projects you approved.

Those of us who have been wondering what took the county almost two years to secure a contract to fix the softball fields at Murphey Candler Park, a project approved in the 2005 bond referendum, now have our answer.

In addition, the county is using the HOST sales tax to help fund its new arts center. This use of HOST funds is a far cry from the original purpose of HOST to provide property tax relief to DeKalb citizens. While up to 20 percent of HOST sales tax proceeds technically can be used to fund infrastructure improvements, the arts center bears only the faintest resemblance to an “infrastructure” improvement.

The CEO’s office has suggested that the final price tag for the project could rise as high as $14 million. That doesn’t include all of the interest we’ll be paying on the bonds. And the $14 million is just the capital costs, not the operating expenses. The county isn’t sure how it will pay for the ongoing expenses of operating the facility.

Every year, the CEO and his administration approach DeKalb’s legislative delegation to approve $30 to 50 million in additional bonded indebtedness to fund public safety projects they tell us are “critical.” When the county stretches this far to find the funds for projects like a new performing arts center, it certainly makes this legislator wonder how “critical” the county’s other projects actually are.

A version of this post was published in the September 26 edition of the Dunwoody Crier.

I am pleased to report a significant victory for DeKalb County taxpayers that occurred late in the 2007 legislative session. 

Thanks to House Bill 181, which I authored, and due to the efforts of a small handful of DeKalb legislators who helped pass this legislation, you now will have the opportunity to vote in a referendum anytime the DeKalb County Government proposes to use your tax dollars to repay the principal and interest on new bonds for county projects.

You may be asking:  Don’t we already have the right to vote on bonds?  After all, there was a referendum to approve the $230 million bond issue that was proposed by the county back in 2005 for parks, libraries, and transportation projects.

Without House Bill 181, the answer to that question is no.  Only general obligation bonds, the kind of bonds that show up on your property tax bill, require a referendum.  As an end-run around your right to vote in a general obligation bond referendum, the county has made a practice of asking the legislature to create new county government entities known as authorities, and to give these authorities unlimited power to float additional revenue bonds, a different type of debt.

By now, you probably have more questions:

What is an authority?  An authority is a specialized quasi-governmental entity created by state law for a specific purpose.  Frequently, an authority builds and oversees one or more specific capital projects, like a water and sewer authority, a housing authority, or a hospital authority.  In DeKalb County, an authority usually has a governing board appointed by the CEO.

What are revenue bonds?  When used for their intended purpose, revenue bonds are debt on which the principal and interest are repaid using revenue generated by the project that was built using the bonds.  For example, water and sewer fees are used to repay the revenue bonds for water and sewer projects, and rents are used to repay the revenue bonds for housing projects.

However, the authorities that DeKalb County asks the legislature to create are different.  These authorities issue revenue bonds, build projects for the county, and lease the projects back to the county for the county’s use. The county then pays the principal and interest on the bonds directly out of the county treasury in the form of rent payments.

In other words, non-elected appointees of the CEO are authorized to float bonds for which your tax dollars are used to repay the principal and interest.  The CEO’s paid lobbyist stood up in a recent DeKalb County House Delegation meeting and declared that the county may seek to fund hundreds of millions of dollars in public safety projects using this mechanism.  Scary.

The few voices of fiscal responsibility among DeKalb legislators don’t control enough votes within the DeKalb delegation to stop local legislation that would create these county government authorities, but we were able to pass statewide legislation to require a referendum so the county must seek your approval whenever it proposes to use these authorities to float bonds, incur debt, and spend your tax dollars.  That’s exactly what House Bill 181 does.

Many thanks to Senator Dan Weber, who carried HB 181 in the State Senate, for his outstanding work in securing Senate passage of the bill.  Representatives Jill Chambers and Fran Millar, two co-sponsors of HB 181, deserve thanks for their assistance during a contentious floor debate in the House of Representatives on final passage of the bill.  Representatives Kevin Levitas and Mary Margaret Oliver also co-sponsored and voted in favor of giving you the right to vote on bonded debt.  The other 14 members of the DeKalb County House Delegation voted against the measure.  Governor Perdue signed HB 181 into law on May 24, 2007.