Secrecy vs. transparency as "governments turn to bank loans rather than bonds."

You're right.

I need to stop giving his new ideas for borrowing and secrecy.

The Hidden Risks of a Growing Way to Pay for Infrastructure, by Lynnette Kelly (Governing)

More and more, governments are turning to bank loans rather than bonds. But too often the terms of the loans -- and who is first in line to collect -- are secret.

A perilous new financial risk may be hiding in the fine print of loan agreements in state capitals, county seats and city halls across the country. The cost could be high for millions of individuals whose investment dollars help finance the public schools, water systems, bridges and roads that we all rely on and which in many cases are in desperate need of repair.

Investment in the nation's infrastructure has long been a partnership between state and local governments and retail investors. State and local governments prioritize public projects, investment bankers provide products to help spread costs over the life of the project, investors buy in to earn reliable, often tax-free interest income, and then taxpayer dollars repay the bonds. Today, more and more communities are opting for alternatives to this traditional municipal-bond model in the form of direct loans from banks. Estimates are that the bank financing of public projects has ballooned to more than $155 billion with another $25-$30 billion being added each year.

Borrowing funds from a bank to build a bridge is not inherently problematic. The problems arise when the extent of the borrowing -- and the precise terms of the loans -- are a secret. For municipal-bond financings, states and communities have obligations under federal law to publicly disclose material information to investors at the outset. But no such disclosure requirements exist at the time they receive loans from banks. Investors who hold a city's outstanding bonds may have no idea that the city has taken on more debt or that the bank making the loan has made sure it will be first in line to collect if the city runs into financial troubles.

That's just what happened in Lawrence, Wis. The small town borrowed heavily from local banks, and it agreed to put the banks before the bondholders in the event it someday couldn't cover all of its financial obligations. When a major ratings agency learned of the unfavorable terms for bondholders, it quickly downgraded Lawrence's bonds to junk status. Bondholders who thought they were holding investment-grade paper are now left with a far riskier asset.

No one knows how many other Lawrences are out there ...

A mockery of transparency, but Gahan finally coughs up animal shelter finance hairball.

Because who wants a CPA handling the records when a political functionary will do?

But shouldn't the header read, "City hands over New Albany-Floyd County Animal Shelter financial records?"

New Albany-Floyd County Animal Shelter hands over financial records, Jerod Clapp (All About Clark County)

NEW ALBANY — After more than three months, the City of New Albany turned over financial records from the New Albany-Floyd County Animal Shelter to the News and Tribune.

On Oct. 19, the newspaper submitted an open records request to the office of the city controller,
Linda Moeller, for the same financial information requested by the Floyd County auditor, Scott Clark. His office received its information last week.

The auditor’s request stems from a dispute on how much the county pays into the shelter’s budget versus what it gets back in revenues from it.

The records are from 2012 to 2013 and include more than 1,800 pages of finance information. In an interview earlier this week, Clark said the information he received last week was also voluminous and would take some time to comb through.

“I was glad that they finally, after seven months, gave us the information,” he said.

Why do you think politicians like roads and bridges so much?

This article gives whole new meaning to considerations of the usual suspects.

The impact of public officials’ corruption on the size and allocation of U.S. state spending, Leighton Walter Kille (Journalist's Resource)

 ... A 2014 study in Public Administration Review, “The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending,” looks at the impact of government corruption on states’ expenditures.

The study’s findings include:

Construction projects find particular favor because they present a wealth of corruption opportunities: “First, construction involves large, complex, nonstandard activities, so the quality of construction can be very hard to assess. Second, domestic and international construction industries are dominated by a few monopolistic firms. Third, the industry is closely linked to the government. Governments have major roles as ‘clients, regulators, and owners’ of construction companies. It is very common to bribe government officials to gain or alter contracts and to circumvent regulations related to construction.”