Consolidation plan lacks important details

August 2, 2011
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It is said that there are three sides to any story: yours, mine and the facts. It seems a fitting reminder as U.S. legislators hold fiercely to specific views rather than thinking through a plan to address the facts.

What is most important here is that it is against that backdrop that the Business Journal reports this week on commercial real estate and on discussion of the consolidation of local governments.

The likely downgrading of the U.S. credit rating should the debt ceiling not be lifted has immediate impact on businesses like that of Colin Kraay, principal with Colliers International of West Michigan. Should the debt ceiling not be raised and credit ratings drop, financial institutions will raise interest rates. While the housing sector remains mired in the Great Recession, it also has impact on commercial properties and construction. The investment market will follow such a decline.

The importance of bond ratings is certainly well understood here. Downgrading a bond rating creates more debt in the form of higher interest. That fact is at the center of the debate between Kent County and the One Kent Coalition. During an editorial board meeting with Kent County Commission Chairwoman Sandi Frost Parrish, she emphasized that while the county is supportive of some type of consolidation, specific taxpayer issues must be determined, rather than “figured out at some time in the future after legislation is approved.”

Chief among those taxpayer concerns is that the county is one of two governmental entities in Michigan with a triple-A bond rating (Oakland County is the other), which saves taxpayers $2,300 from principal payments for every million dollars of new debt every year. Second, the city of Grand Rapids, the entity to which One Kent would have the county consolidate into one unit of government, has less money, more debt and a double-A bond rating.

Parrish is particularly concerned about heading to New York City for meetings with Standard & Poor’s credit rating agency next spring with “unknowns” that will certainly affect the county bond rating. Parrish also lists among her chief concerns whether such a merger of county and city would extend the Grand Rapids income tax to residents of the entire county.

It is irresponsible that One Kent Coalition members do not seek to address such “details” of the proposed plan, and Parrish has responsibility to refrain from such reckless action. She enumerates several projects on which the city and county, and the city with other cities in Kent County, have created consolidated services. The consolidation discussion is welcome, as long as the details of major taxing issues are known.

Parrish is intent on providing Kent County residents with a vision of the future by various consolidation efforts. She asked rhetorically, “What vision gets people to give up borders?”

That, too, is a question asked ’round the country.

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