Thursday, March 25, 2010

Senator Tisei Issues Statement on Today's Passage of Lawrence Bailout Bill in Senate

Senate Minority Leader Richard R. Tisei issued the following statement today, following the Senate’s 31-4 vote authorizing the City of Lawrence to borrow up to $35 million to address a growing budget deficit (members of the Senate Republican Caucus voted against the bill):

“The bill the Senate passed today will authorize the City of Lawrence to borrow up to $35 million to address a budget deficit that is at least $24.5 million. Clearly, the situation is so bad in Lawrence right now that the state has no choice but to step in to make sure the city doesn’t go bankrupt. However, I still think we’re making a huge mistake by not putting a finance control board in place right from the start, which is what the Senate Republican Caucus has been advocating.

I realize there is language in the bill that would allow a state-appointed overseer to request a finance control board at any time, but I don’t see why we should wait any longer and let the city fall into an even bigger financial hole in the meantime.

When this bill was filed in December, Lawrence was looking at a budget shortfall of $9.5 million. Here we are, three months later, and the deficit has more than doubled – in fact, it’s now almost triple the original estimates. That shows me that immediate and decisive action is needed to get the city’s fiscal problems under control, and that’s exactly what a finance control board would be able to do.

I know some people have argued this is not a bailout bill because we’re not lending the money to Lawrence, but let’s be honest, what else can you call it? We’re allowing Lawrence to exceed its borrowing limit by issuing municipal bonds, and we’re allowing those bonds to be backed up by future local aid payments from the state. If Lawrence defaults on its loan repayments, it will be the taxpayers who are left holding the bag.

It’s ironic that on the very same day we first debated this bill back on March 9, the Superintendent of the Lawrence Public Schools was indicted on several counts of fraud and embezzlement. Clearly, Lawrence is dealing with many underlying issues that need to be resolved before it can achieve fiscal stability.

We should not be throwing good money after bad by allowing Lawrence to borrow this money without having the proper safeguards in place right from the start. A finance control board will help to protect the interests of all the state’s taxpayers, especially the residents of Lawrence, because it will make the tough but necessary decisions on spending and reforms from day one.”