by Jon Baliles
One of the eternal mysteries of the Commonwealth of Virginia’s governing structure is the separate treatment of counties and cities. We are the only state in the country that has the screwy system of independent cities that are not part of a county government or structure. But that’s not where the screwiness stops.
For some reason, the state treats bond referendums for cities differently than those for counties. A county can issue bonds for major projects (usually for schools, roads, fire stations, libraries, etc.), but it has to be put to a voter referendum for approval. The state doesn’t want localities to spend what they don’t have, and then come to the state for a bailout.
Cities, however, can authorize major bond issuances with just the approval of the governing body (i.e., City Council). State code section § 15.2-2636 states: “The governing body may authorize and issue bonds in accordance with the applicable provisions of this chapter, without submission of the question of the issuance of the bonds to the voters for approval.”
So what? It is important to remember that this different “standard” allows cities to make bond referendums much more susceptible to politics (and shenanigans) because you only need a majority of votes of the governing body. That’s a much easier bar to clear than having to convince voters.
I bring this up only to point out the difference in referendums and what localities use them for. What we saw this week in our region were two huge referendums pass overwhelmingly: Henrico ($511 million); and Chesterfield ($540 million).
They weren’t promising an NCAA Tournament appearance every few years or new restaurants or office towers that pay debt service instead of going the general fund. No, they were asking for voter approval to build and renovate schools, expand libraries, improve public safety, etc. You know, the boring (but essential) stuff.
The same state code sets a different bar for counties. If you skip down just a couple of lines in state code to section § 15.2-2638, it states: “…no county has the power to contract any debt or to issue its bonds unless a majority of the voters of the county voting on the question at an election held in accordance with §§ 15.2-2610 and 15.2-2611 approve contracting the debt, borrowing the money and issuing the bonds.” (There are a few exceptions for both sections, but not many.)
In Henrico’s case, they had all kinds of public information sessions beforehand to find out what residents needed; then they compiled a list and cost amounts and sent out mailers, hosted information sessions, took out ads, and produced a sharp video detailing the projects that would be funded in every corner of the county.
“It’s exciting, regardless of where you live. East, west, central. The bond referendum is going to touch your part of town,” Henrico County Supervisor Tyrone Nelson told Elizabeth Holmes at CBS6.
Of the $511 million, there were four areas to be funded: $37 million for parks and recreation improvements; $50 million for flood prevention efforts; $83 million for public safety facility improvements and upgrades to firehouses; and $340 million to school improvement projects. All four passed with at least 84% approval and the public safety referendum passed with almost 90% approval.
Supervisor Dan Schmitt said: “You can’t get 90% of Americans, you can’t get 90% of folks in Henrico to agree on what flavor of ice cream to eat every day, but we got them to agree in the future of our county, by telling them our story and showing past historical successes of what this county can do, when the resident’s trust is placed in county leadership.”
And these projects are not vague concepts that take years to argue about how large a school to build (like the battle over George Wythe High School), but a list that you can see here and that residents can see in their neighborhoods.
The Henrico Citizen reported, “The landslide of support for the referendum was even stronger than that shown by voters in 2016, when they approved the last such referendum, a five-question proposal whose “yes” votes ranged between 76% and 86%.”
Chesterfield voters also approved $540 million in bond-financed projects with 76% of voter approval. They also had four targets for the bond funding — $375 million for schools; $45 million for parks; $38 million for libraries, and $81 million for public safety. Their detailed list of projects can be seen here.
Like Henrico, Chesterfield officials held meetings over the last five years identifying needs and listening to residents. They also held public meetings, Facebook Live events, and podcasts to educate people on the referendum. Since 2010, Chesterfield has become home to 50,000 more residents and 2,000 school-age children and is receiving 6,000 more Fire and EMS calls than five years ago.
The refreshing thing about referendums like this is that they are done with deliberation, consultation, planning, and approval of the residents. Neither county is raising taxes to fund these projects but managing their debt with watchful and timely financing (especially with current interest rates) and creating a decade-long timeline to complete the projects. Further, they do not include either county siphoning off future revenues for thirty years to back or pay bond-issued debt the way Navy Hill would have, for example.
It may not be a coincidence that this portion of state code was written in 1950 when Virginia was under the iron grip of the Byrd Machine and voting was limited to the elite. There have been a half-dozen amendments to it over the decades, and I have no idea of the history behind it nor if there is a practical reason for the different standard, but I plan on doing more research. It is a fascinating (and vexing) dichotomy.
As written, it allows more risky standards for bond financing for cities than counties. It keeps the door open for cities to use bond financing for just about any project that is approved with a simple majority vote by the governing body. That can happen before the people even know what is going on or if the plan is reasonable — or needed.
And I am not just talking about Richmond — Bristol got into massive financial trouble issuing bonds for a development called “The Falls” and Buena Vista nearly went bankrupt by issuing bonds to build a golf course to drive economic development. Why go to all that trouble of planning projects and legitimate financing and making your case to the public when you can just wing it by sweet-talking and back-slapping a simple majority of politicians?
Maybe one of the reasons we have so many challenges that never seem to get solved is that we keep thinking that next pull of the casino handle is going to deliver the jackpot when all it does is perpetuate the very conditions we need to improve. Some “leaders” prefer to keep issues alive for political and fundraising reasons rather than solve and resolve the problems that will help people improve their lives and the health of the City. A double-standard in the state code for bond financing doesn’t help.
Jon Baliles is a former Richmond city councilman. This column has been republished with permission from RVA 5X5.
